Investors are always looking for the “next new thing." That's to be expected. When you can invest early in emerging trends, you stand to make the largest profit. But finding those trends is not a sure thing. For example, many investors were burned by the cannabis sector. While it still holds promise, the payoff hasn't come as quickly as many investors believed it would.
In 2023, the global transition to clean energy is an emerging trend in our economy. This will take the form of electric vehicles, renewable energy projects, and investments in updating our existing infrastructure.
That's why the Biden administration is investing $226 billion in copper as part of the Infrastructure Act passed by the U.S. Congress in 2022. That money will go to repair roads, bridges, existing transmission lines, and electric vehicles.
Simply put, demand for copper is going to surge. That means that now is the time to invest in copper. Fortunately, there are many stocks for you to choose from. And in this presentation, you'll find seven stocks that fit investors with different risk tolerances.
Quick Links
- Rio Tinto
- Southern Copper
- Newmont
- Freeport-McMoRan
- Glencore
- Hudbay Minerals
- Alpha Copper
#1 - Rio Tinto (NYSE:RIO)
The first copper stock to consider is also the largest by market cap. Rio Tinto Group (NYSE: RIO) has a 94.3 billion market cap. The multinational miner is the second largest miner worldwide.
Like many stocks on this list, RIO stock has been on a tear since hitting its 52-week low in October 2022. As of February 21, 2023, the stock has climbed 42% - significantly better than the broader market. That has largely matched the recovery in copper prices. That recovery is muting one of the most bearish arguments against owning copper stocks.
Rio Tinto got into some trouble about 15 years ago after going on an acquisition spree. However, the company now has a hefty free cash flow and they’re not anxious to apply that to new acquisitions. That could be good for investors because that means the company’s free cash can be applied to the company’s dividend. The semi-annual dividend has a yield of over 7% as of this writing.
About Rio Tinto Group
Rio Tinto Group engages in exploring, mining, and processing mineral resources worldwide. The company operates through Iron Ore, Aluminium, Copper, and Minerals Segments. The Iron Ore segment engages in the iron ore mining, and salt and gypsum production in Western Australia. The Aluminum segment is involved in bauxite mining; alumina refining; and aluminium smelting.
Read More - Current Price
- $58.64
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 4 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#2 - Southern Copper (NYSE:SCCO)
Southern Copper Corp. (NYSE: SCCO) is one of the largest integrated copper producers in the world with a focus on properties in Chile. The company has a market cap of $57.5 billion. Since hitting a 52-week low in September 2022, SCCO stock has surged over 73%.
Working in the company’s favor is a stellar profit margin of over 26%, that is well above the sector average of around 15%. The company is also expected to grow earnings at an average pace of around 21% over the next five years. And over the past few months, short sellers have been exiting their positions.
Weighing against it is the stock’s P/E ratio which, at 21x earnings, makes the stock a fairly expensive proposition. And Southern was hit with a Sell rating from an analyst at Deutsche Bank in early February 2023. Plus, in the last two quarters the company has reported revenue and earnings that are down on a year-over-year basis.
About Southern Copper
Southern Copper Corporation engages in mining, exploring, smelting, and refining copper and other minerals in Peru, Mexico, Argentina, Ecuador, and Chile. The company is involved in the mining, milling, and flotation of copper ore to produce copper and molybdenum concentrates; smelting of copper concentrates to produce blister and anode copper; refining of anode copper to produce copper cathodes; production of molybdenum concentrate and sulfuric acid; production of refined silver, gold, and other materials; and mining and processing of zinc, copper, molybdenum, silver, gold, and lead.
Read More - Current Price
- $93.01
- Consensus Rating
- Reduce
- Ratings Breakdown
- 2 Buy Ratings, 3 Hold Ratings, 4 Sell Ratings.
- Consensus Price Target
- $94.81 (1.9% Upside)
#3 - Newmont (NYSE:NEM)
Newmont Corporation (NYSE: NEM) is better known as a gold mining company to some investors. But it also mines many copper, silver, and other metals. As of the company’s most recent earnings report in November 2022, Newmont had mined 110 million pounds of copper and had over 150 billion pounds in reserve.
Newmont draws some criticism from investors due to its growth strategy through acquisitions. In response, the company will point to its balance sheet which as of its last earnings report featured $6.7 billion in total liquidity. One benefit of that balance sheet is that the company will have little trouble paying its dividend, which currently has a yield of 4.87%.
NEM stock is down about 33% in the last 12 months and about 5% in 2023. However, analysts tracked by MarketBeat give NEM stock a consensus price target of $64.02 which would be a 40% improvement from the price as of February 21, 2023.
About Newmont
Newmont Corporation engages in the production and exploration of gold. It also explores for copper, silver, zinc, and lead. The company has operations and/or assets in the United States, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, Papua New Guinea, Ecuador, Fiji, and Ghana.
Read More - Current Price
- $38.28
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 9 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $54.31 (41.9% Upside)
#4 - Freeport-McMoRan (NYSE:FCX)
The last large-cap stock on this list is Freeport-McMoRan, Inc. (NYSE: FCX). With a price-to-earnings ratio of around 18x earnings, it’s not the cheapest stock on this list. But the company carries a $61 billion market cap and is up approximately 12% in 2023.
Freeport-McMoRan has operations in Indonesia which have proven to deliver large volumes at large cost. When the company reported earnings in January, they reported that the mine operates as the world’s second largest copper mine with a net unit cost of $0.06 a pound.
In the company’s latest earnings report, earnings were down year-over-year, but doubled from the previous quarter. That kind of earnings growth is likely to draw the attention of institutional investors that own approximately 77% of FCX stock.
It got the attention of a few analysts who raised their price targets for FCX stock after the report was issued. Short interest dropped over 30% in January 2023 which could remove a headwind on the stock.
About Freeport-McMoRan
Freeport-McMoRan Inc engages in the mining of mineral properties in North America, South America, and Indonesia. It primarily explores for copper, gold, molybdenum, silver, and other metals. The company's assets include the Grasberg minerals district in Indonesia; Morenci, Bagdad, Safford, Sierrita, and Miami in Arizona; Chino and Tyrone in New Mexico; and Henderson and Climax in Colorado, North America, as well as Cerro Verde in Peru and El Abra in Chile.
Read More - Current Price
- $38.86
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 8 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $53.92 (38.7% Upside)
#5 - Glencore (OTCMKTS:GLCNF)
Glencore Plc (OTCMKTS: GLCNF) is one of the world’s leading copper producers. The Anglo-Swiss company got into some serious debt problems in the mid-2010s that nearly threw the company into bankruptcy. But the company is free of debt and with an $80 billion market cap, the company is looking to continue its strategy of growth through acquisition.
According to Bloomberg, the company has told investors it has four significant projects, mostly in South America, that will reward them if copper prices continue to rise.
That being said, this is an OTC stock and short interest has been increasing sharply in the last month. Still with a price of just around $6 per share, Glencore could be a good value for speculative investors. Particularly since it recently announced a plan in which it will return $7.1 billion to shareholders in the form of dividends and share buybacks.
About Glencore
Glencore plc engages in the production, refinement, processing, storage, transport, and marketing of metals and minerals, and energy products in the Americas, Europe, Asia, Africa, and Oceania. It operates through two segments: Marketing Activities and Industrial Activities. The company engages in production and marketing copper, cobalt, lead, nickel, zinc, chrome ore, ferrochrome, vanadium, aluminum, alumina, and iron ore; and coal, crude oil, refined products, and natural gas, as well as oil exploration/production and refining/distribution.
Read More - Current Price
- $4.47
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
#6 - Hudbay Minerals (NYSE:HBM)
The last two stocks on this list are small-cap stocks. The first is Hudbay Minerals, Inc. (NYSE: HDM). The mining company produces copper concentrate, molybdenum concentrate and zinc metal. The company has ongoing operations in Canada and Peru and is developing its Copper World operations in the United States. That’s expected to produce 86,000 tons of copper in phase one operations.
In the last quarter, the company produced 24,498 tons of copper which was a 5% year-over-year decrease. However, that reduction had a bullish offset as the consolidated cash cost per pound was 58 cents as opposed to 65 cents in the same quarter in 2022.
HDM stock currently trades as a penny stock at $4.95 per share. And with a P/E ratio of 17x earnings it may be slightly expensive. The stock has a Hold rating from the analysts surveyed by MarketBeat and has a consensus price target of $10.47.
About Hudbay Minerals
Hudbay Minerals Inc, a diversified mining company, focuses on the exploration, development, operation, and optimization of properties in North and South America. It produces copper concentrates containing gold, silver, and molybdenum; gold concentrates containing zinc; zinc concentrates; molybdenum concentrates; and silver/gold doré.
Read More - Current Price
- $8.24
- Consensus Rating
- Buy
- Ratings Breakdown
- 6 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $11.17 (35.5% Upside)
#7 - Alpha Copper (OTC:ALCUF)
The next small-cap stock on this list is Alpha Copper Corp. (OTCMKTS: ALCUF). The Canadian mining company’s operations are centralized in two holdings that total 17,640 acres in British Columbia. One of these projects, the Indata project is located in an area that is believed to hold significant amounts of copper deposits.
Another advantage that the company has its specialty in mining “porphyry” copper deposits. These deposits yield about two-thirds of the world’s copper. And as an added benefit, these deposits are usually found with gold deposits.
That’s the reward. The risk is that the sites are “believed” to hold significant amounts of copper. That’s not the same as knowing. And the stock trades on the over-the-counter markets so it may not provide the liquidity that many investors desire. Still, if you have an appetite for risk and the ability to put some speculative capital at risk, Alpha Copper makes for an intriguing investment.
About Alpha Copper
Alpha Copper Corp. engages in acquiring, exploring, and developing mineral properties in British Columbia. The company explores for copper, gold, and molybdenum deposits. Its flagship properties are Indata property, which comprises 16 mineral claims covering an area of 3,189 hectares; and Okeover Property that consists of 12 mineral claims covering an area of 4,614 hectares in British Columbia, Canada.
Read More - Current Price
- $0.13
- Consensus Rating
- N/A
- Ratings Breakdown
- 0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- N/A
Investing in copper stocks is not without risk. But the simple fact is that the clean energy transition won't happen – can't happen – without copper. The International Energy Agency predicts that global demand for renewable electricity will increase 60% from current levels by 2026. By 2030, there will be 23 million electric vehicles (EVs) than existed in 2010.
All of this development requires copper. That's why analysts forecast that global copper demand could increase 350% by 2050. And this is global demand so there will be more urgency in copper mining than ever before because the consequences of not having enough copper means that the clean energy transition will be delayed.
There's no political will for that right now. And with the money that many companies have invested in clean energy, there's plenty of economic incentive. That's why now is the time to invest in copper stocks. We'd like to help. MarketBeat is a one-stop resource to research the stocks on this list. And with MarketBeat All-Access, you get access to other tools that can further your research. With a 30-day trial period, you have nothing to lose, so give it a try today.
More Investing Slideshows:
