Here's Why You Should Add Freeport (FCX) to Your Portfolio

Freeport-McMoRan Inc. FCX stock looks promising at the moment. The company’s shares have rallied around 78% in the past three months.

We are positive regarding the company’s prospects and believe that the time is right to add the stock to your portfolio. The stock looks promising and is poised to carry the momentum ahead.

Let's see what makes the company an appropriate investment option at the moment.

An Outperformer

Freeport has outperformed the industry it belongs to in the past year. The company’s shares have gained 21.5% over this period compared with the 6.9% rise of the industry. The stock also outpaced the S&P 500’s rise of 5.8% over the same period.

Upbeat Q2 View

Recently, Freeport issued an update on its second-quarter 2020 operational and financial performance.

The company expects second-quarter 2020 copper sales to exceed April 2020 estimate of 690 million pounds by nearly 8% and gold sales to surpass the previous estimate of 165,000 ounces by around 10%.

Assuming average copper price realization of $2.54 per pound in the second quarter, Freeport projects adjusted EBITDA to be around $650 million.  

Focus on Key Growth Projects

Freeport is advancing the ramp-up of underground production at Grasberg, which will help it establish large-scale, low-cost copper and gold production. The company is also advancing initiatives in the Americas to boost cashflows in 2021 and beyond.

In North America, the company is implementing its revised operating plans. Further, production, costs and capital management are expected to be at par or better than forecast. The Lone Star project is mostly complete and is on track to produce nearly 200 million pounds of copper per year starting second-half 2020.

In South America, Freeport achieved considerable progress at Cerro Verde during the second quarter to restore operations. Cerro Verde mill operations produced an average of 315,000 metric tons of ore per day during the second quarter.

In Indonesia, Freeport’s ramp-up of underground production at the Grasberg minerals district is progressing per schedule.  In the second quarter, the Grasberg Block Cave and Deep MLZ underground mines together produced more than 54,000 metric tons of ore per day.

Surging Estimates & Earnings Growth

Earnings estimate revisions have a great impact on stock prices. Notably, the Zacks Consensus Estimate for Freeport’s second-quarter earnings moved up 70% in the past month.

The consensus mark for Freeport’s 2020 earnings is currently pegged at 12 cents, which suggests 500% year-over-year growth.

 FreeportMcMoRan Inc. Price and Consensus

FreeportMcMoRan Inc. Price and Consensus

FreeportMcMoRan Inc. price-consensus-chart | FreeportMcMoRan Inc. Quote

Zacks Rank & Other Key Picks

Freeport currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the basic materials space include Sandstorm Gold Ltd. SAND, Harmony Gold Mining Company Limited HMY and Alamos Gold Inc. AGI, all carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Sandstorm Gold has an expected earnings growth rate of 55.6% for 2020. The company’s shares have surged 70.3% in the past year.

Harmony Gold has an expected earnings growth rate of 264.3% for fiscal 2020. Its shares have returned 154.9% in the past year.

Alamos Gold has an expected earnings growth rate of 65% for 2020. The company’s shares have gained 67.5% in the past year.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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