Freeport: Back up the truck for a superior copper play

Posted Jul 21st 2009 5:40PM by Joseph Lazzaro
Filed under: Freep't McMoRan Copper (FCX), Stocks to Buy

Freeport has taken a hit, and is not only still standing, it's ready to take on new challenges. I'm Reiterating my Buy rating for Freeport McMoRan (NYSE: FCX), first recommended on March 23, 2009 at a price of $41.87.

The global recovery appears to be underway, and with it demand for key commodities, such as copper, will increase. And Freeport, the world's second largest producer of copper, is poised to capitalize.

Ignore the short-term commodity market hic-cups: FCX is a long-term play, and prices in the high-$50s may represent your last chance to realize a large gain with FCX, as this train is leaving the station. The First Call FY2009/FY2010 EPS estimates for FCX are $1.70 to $3.77.

Stock Analysis: Freeport-McMorRan is a moderate-risk stock. If you've already purchased the company's shares, hold them. If not, consider buying a 50% position in FCX now; then buy another 25% in three months, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your PEP position before October 2009. Revised Sell/Stop Loss if you were to buy shares in this company: $32.

- -

Disclosure: Lazzaro has no positions in stocks, but does own shares in two Pimco Bond Funds: PHDAX and PYMAX.

Tags: copper, freeport McMoRan, FreeportMcmoran, gold