While the stock market’s push toward recovery is underway, some notable sectors are still lagging. One notable commodity that’s beginning to regain lost ground is copper. In recent months, copper has recovered from its 52-week low and now shows signs of bullishness. Demand for copper has remained strong as it is one of the most widely used metals in various industries.
Copper futures have started to recover after hitting its 52-week low, and it recently started trading above its 100-day moving average. Prices have also formed a notable ascending triangle that is narrowing. RSI is also staying above fifty, indicating accelerated momentum. Indeed, commodities traders and investors may already be gearing up, setting entry and exit prices while waiting for the possible breakout.
But how do you take advantage of this bullish sentiment if you don’t want to trade the commodity? Let’s look at the next best thing — buy-rated copper mining companies.
Freeport-Mcmoran Inc. (FCX)
Freeport-McMoRan Inc. is a mining company that operates through its proven and probable copper, molybdenum, and gold reserves. FCX is based in Freeport-McMoRan Center, in Phoenix, Arizona, and has operations in:
- North America
- South America
- Indonesia
FCX's operating segments are Morenci, Rod & Refining operation, Atlantic Copper Smelting & Refining, and Cerro Verde and Grasberg (Indonesia mining) copper mines. Freeport-McMoRan is one of the major players in copper production and the world's largest molybdenum producer.
Analysts Ratings
Analysts rate FCX as a “Moderate Buy” based on 4 Strong Buys, 1 Moderate Buy, 8 Holds, and 1 Strong Sell. The mean target is $43.84, and a high target of $57.00, an upside of 30.64%.
Teck Resources Limited (TECK)
Teck Resources Limited is a mining company focused on the copper, zinc, and energy segment. Teck is renowned as the biggest North American producer of steelmaking coal. Even though TECK is in Canada, it also has projects in other parts of the world. These include:
- Chile - Carmen de Andacollo, NuevaUnion, Quebrada Blanca, Quebrada Blanca Phase II
- United States - Elkview, NewRange Copper Nickel
- Peru - Antamina
TECK operates four copper mines in the American continent — Highland Valley Copper, Quebrada Blanca, Carmen de Andacollo, and Antamina — with plans to expand its operations and develop new mines in both North and South America. The company is also a prominent name in seaborne steelmaking coal exportation. It has become the 2nd largest exporter globally throughout its years of operation. TECK’s continued focus on sustainability and responsible mining has made it a darling for investors focused on environmental conservation.
Analyst Ratings
Analysts rate TECK as a “Moderate Buy” based on 9 Strong Buys, 3 Moderate Buys, and 4 Holds. The mean estimate for TECK is $ 48.09 and a high target of $59.51, an upside of 36.21%.
McEwan Mining Companies Inc. (MUX)
McEwen Mining Inc. is a mining and minerals production and exploration company. Its primary focus is on the exploration, development, production, and sale of gold and silver. McEwen’s gold bar mine is located in Roberts Creek Mountains as part of its United States segment. MUX has around 5,100 hectares of land packages for its explorations and advanced-stage properties in its Canada segment. At the same time, it operates in the El Gallo mine in its Mexico segment and the San Jose mine land package for its Minera Santa Cruz segment.
MUX also operates a copper-focused subsidiary, McEwen Copper, which recently closed an ARS$ 30 billion deal with Stellantis N.V. (STLA), one of the biggest multinational automotive companies in the world, home to brands like Chrysler, Peugeot, Maserati, and Alfa Romeo. The proceeds from the deal will be used to develop the Los Azules copper project in San Juan, Argentina, further bolsterings its copper production capabilities.
Analyst Ratings
Analysts rate MUX as a “Strong Buy” based on 2 Strong Buy recommendations. The mean target for MUX is $ 13.75, and the high target is $18.50, representing an upside of 116.12%.
Final Thoughts
Investing in mining companies is a great alternative to trading copper and other metal commodities. This strategy provides a proxy for investors’ bias without exposure to the commodity’s fluctuations. It also allows them to capitalize on the chosen company's strengths outside of its copper-related operations. However, investors must also watch for significant events affecting the commodities market, like price shifts, government intervention, and other events that can affect the underlying commodity’s price.
On the date of publication, Rick Orford did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
