Copper is sometimes called Dr. Copper because the orange metal is seen as a good indicator of the health of the overall economy. On Tuesday, the Relative Strength (RS) Rating for shares of Southern Copper, the leading copper mining company, climbed to 74, up from 63 the day before. The upgrade came after the company completed a stunning turnaround this year.
Copper is used in communications devices, cars, homes and industry. It's only one of a group of indicators of course, but it's pervasive nature makes it a good economic indicator. In addition to its U.S. mining sites, Southern Copper operates in Mexico and Peru as well.
The upgraded 74 Relative Strength Rating for Southern Copper shows that it's in the top 74% of all stocks, regardless of industry, for price performance this past year.
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Southern Copper Turns Corner To Big Profits
Southern Copper posted weak results at the end of last year and first quarter this year. For the March-ended quarter the Phoenix, Ariz.-based company reported a 10% drop in earnings per share on a 7% dip in revenue. The next quarter it recorded a 69% surge in EPS on 36% higher revenue. In its latest report it said EPS climbed 43% to $1.14 on 17% higher revenue, to $2.93 billion.
The mining company's stock hit an all-time high at the end of May and has consolidated since. Consensus of analysts polled by FactSet is for a 101% pop in EPS this quarter on a 27% increase in revenue, which could energize its stock.
Southern Copper is working on a consolidation with a 128.28 buy point. See if it can break out in volume at least 40% above average. Tuesday afternoon SCCO traded above 102, down 2.5% for the day.
Other Ratings Are Even Better
The copper mining giant has an 88 Composite Rating out of 99, a terrific 96 EPS Rating and a B Accumulation/Distribution Rating on an A+ to E scale. The B rating shows that mutual funds, ETFs and the like are fairly heavy buyers of its stock.
Southern Copper holds the No. 1 rank among its peers in the Mining-Metal Ores industry group. Alcoa and Cameco are also among the group's highest-rated stocks.
IBD's proprietary Relative Strength Rating tracks market leadership with a 1 (worst) to 99 (best) score. The rating shows how a stock's price performance over the last 52 weeks stacks up against all the other stocks in our database. Stocks that go on to make the biggest gains tend to have an RS Rating north of 80 as they launch their largest price moves. See if Southern Copper can continue to rebound and clear that threshold.
Please follow James DeTar on Twitter @JimDeTar
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