Freeport-McMoRan thrives with rise in copper prices
Now and then we hear about thieves making off with air conditioners, drain pipes and telephone lines to capture the increasing scrap value of their copper. Copper thefts appear to be set off when the metal’s price approaches $4 a pound, as it did in 2008. It soon plunged to earth, though, bottoming out below $1.50 by early 2009. Since then, the base metal has worked its way back to nearly $4.
As a result, the share price of copper producer Freeport-McMoRan Copper & Gold (NYSE: FCX) dropped from almost $114 in July 2008 to the low $20s later in the year. It’s recently around $100.
Morgan Stanley sees copper consumption up 5 percent in the U.S. over last year, up 12 percent in Europe and 37 percent in Japan. It expects worldwide demand for copper to outstrip supply until 2013, due largely to strong demand in China. That bodes well for copper producers.
Meanwhile, Freeport, which increased its earnings by 27 percent last quarter, is expanding its capacity and has reached an amiable accord with the Democratic Republic of Congo regarding the operation of a big new mine there.
Freeport is likely to maintain its strength for at least several years. Keep an eye on this well-managed, geographically diverse company with high-quality, long-lived assets.
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My dumbest investment
My dumbest moves have involved selling companies I strongly believed in. I inherited my portfolio in 2004, and along with it, an investment consultant who thought Apple was a little company with no future. Impressed by his expertise and conscious of my own ignorance, I vacillated between his opinion and my inner conviction. I bought 220 shares of Apple at $29, sold them after a few months at $33, and then bought at $35 and sold at $67. Finally, I bought 150 shares in 2007 at $133 and have hung on. With all that trading, I enriched the guy, while losing out on gains. If you believe in a company you understand well and that has sound financials, ignore the “experts” and stick to your own convictions! – L.D., France
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