Freeport McMoRan is in the catbird seat

Simply, Freeport is in the catbird seat regarding two key commodities: copper and gold. Freeport is the world's second largest copper producer. The global economic recovery is underway, and with it demand for key commodities, such as copper, will increase. China demand (copper pipes, electric wires), in particular, will help the copper market recover from the price bust associate with the global recession. Lofty prices for gold add to the positive story.

The First Call FY2009/FY2010 EPS estimates for FCX are $4.59 to $6.72. Place a 20 P/E multiple on the FY2010 EPS estimate and FCX will be at/near $130. Further, the $6.72 EPS will likely prove to be low.

Technically, Freeport's stock chart is strong - a stairway - one in which the stock rarely touches the key 50-day moving average. That ability to remain above the 50-day moving average indicates that institutional investors (IIs) are continuing to add to their FCX positions.

Finally, the Sell/Stop Loss has been raised to $42, or to just above cost, from $32.

Stock Analysis: Freeport McMoRan 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 one month, if U.S. and global economic conditions don't worsen substantially. Under any circumstance, don't buy more than 75% of your FCX position before December 2009. Revised Sell/Stop Loss if you bought shares in this company: $42.

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