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The Money Man Behind Rick Santorum: Who Is Foster S. Friess?Miner Freeport-McMoRan (NYSE: FCX) is one such opportunity. Freeport is the world's second-largest copper producer and a major miner of gold and molybdenum. Further, FCX's purchase of Phelps Dodge in March 2007 means that the company now has proven and probable reserves of: copper, 75 billion pounds; gold, 128 million ounces; and molybdenum, 1.9 billion pounds, net minority interests.
But perhaps most important, Freeport is one of only eight companies that have the economies of scale to compete in the global mining sector of the early 21st century. Look for continued merger/acquisition talk in the sector, but don't think of Freeport as an acquisition play: FCX has a large portion of the global copper market, geographical diversification, and enduring relationships with key customers, among other strengths, to continue to perform well in the years ahead.
The qualifiers? True, the copper segment would be hurt be continued sluggish in the U.S. housing sector, but emerging market demand is likely to remain solid, even assuming a slowdown in China's economy. (And so far, China's government has not been effective in slowing its economic growth.) Meanwhile, demand for gold is expected to remain adequate in the years ahead. The Reuters F2007/F2008 EPS consensus estimates for FCX are $9.68/$10.53.
Not surprisingly, investors bid-up Freeport's shares to a pricey $120 earlier this year, but a correction ensued, with FCX currently trading in the $91-$93 range. That translates to a p/e of 11, which is reasonable given FCX's advantageous market position and prospects for growth. Don't expect Freeport's ascent to be perfect and calm, given its dependence on commodity prices, but that does not blot-out the secular trends that point to good things for FCX's in the years ahead.
The First Call mean rating for FCX is: Buy. (19 firms.) Mean 2007 target: $120.40. (high: $157, low: $52.40.)
Stock Analysis: Freeport is a moderate-risk stock not suitable for low-risk investors. Investors should expect above-average volatility with FCX. Don't buy FCX if your portfolio already contains a mining/mineral component. Investors with an investment horizon longer than 2 years should be rewarded from FCX's shares. Sell / Stop Loss if you were to buy shares in this company: $64.
Not surprisingly, investors bid-up Freeport's shares to a pricey $120 earlier this year, but a correction ensued, with FCX currently trading in the $91-$93 range. That translates to a p/e of 11, which is reasonable given FCX's advantageous market position and prospects for growth. Don't expect Freeport's ascent to be perfect and calm, given its dependence on commodity prices, but that does not blot-out the secular trends that point to good things for FCX's in the years ahead.
The First Call mean rating for FCX is: Buy. (19 firms.) Mean 2007 target: $120.40. (high: $157, low: $52.40.)
Stock Analysis: Freeport is a moderate-risk stock not suitable for low-risk investors. Investors should expect above-average volatility with FCX. Don't buy FCX if your portfolio already contains a mining/mineral component. Investors with an investment horizon longer than 2 years should be rewarded from FCX's shares. Sell / Stop Loss if you were to buy shares in this company: $64.
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