Copper stocks have continued to rally in 2024. According to the International Energy Agency, the global demand for copper will double over the next two decades as the world marches towards electrification and sustainable energy solutions. However, despite the rising demand, there is limited supply available for the red-orange metal.
China is the world’s leading supplier of copper. In 2024, the country’s copper smelters are facing supply disruptions, leading to a lower supply. This is one of the major reasons behind the rise in the price of the metal in the international market.
Clean energy will account for 61% of global copper demand by 2040, driven by the increased use of wind and solar power. Copper’s critical role in electrical infrastructure, electric vehicles and renewable energy systems positions several copper stocks for growth. Hence, now could be an opportune time to invest in this growing market.
Thus, let’s explore three copper stocks that are well-positioned to capitalize on the upcoming boom.
Newmont (NEM)
Newmont (NYSE:NEM) is a leading company in the copper industry, holding over 30 billion pounds of copper reserves. However, despite its massive reserves, the company’s stock has not performed well of late. Newmont’s stock has been down 28% over the past year due to various challenges faced by the company. These include operational hiccups and regulatory hurdles.
However, the Newmont’s intrinsic value remains intact, bolstered by a best-in-class asset portfolio. The company’s diversified assets, including significant copper exposure and strategic acquisitions, have poised it for volume growth.
Newmont’s strategic initiatives, including a $1 billion share repurchase program and a consistent dividend, signal the company’s confidence in its long-term value proposition.
The company is currently in a robust financial position, boasting $6.1 billion in total liquidity. In the company’s Q4 2023 quarterly earnings report, the company reported earnings per share of $0.50. The company’s quarterly revenue increased by 24% year-over-year (YOY) to $3.96 billion. Analysts have an average price target of $54 on the stock, which presents a 37% upside.
Teck Resources (TECK)
Teck Resources (NYSE:TECK) has undergone a strategic transformation that positions it as a compelling investment in the burgeoning copper market. The company has divested from its steelmaking coal business and is doubling down on copper, aiming to capture the significant growth expected in this sector. This move is expected to transform Teck Resources into a pure-play copper entity, potentially unlocking significant shareholder value and positioning the company to enjoy the fruits of a copper-centric growth strategy.
The company is committed to providing returns to investors and has a pledge to give back 30-100% of available cash flow to shareholders. Moreover, Teck Resources is posting impressive growth of late and reported $3.05 billion in the last quarter, up 31.3% YOY. The company’s impressive financial performance is creating investor interest, with the stock being 16% in 2024.
Wall Street analysts are bullish on the stock and have a price target of $49.9. This provides a 6.8% upside potential in the near-term.
Freeport-McMoRan (FCX)
Freeport-McMoRan (NYSE:FCX) continues to benefit from the rise in demand for copper. Freeport’s focused copper portfolio, backed by substantial reserves, positions it to capitalize on the electrification trend, underscoring its potential for substantial growth and value creation.
FCX’s operational achievements in 2023, particularly the ramp-up of underground mining operations and the management of unit net cash costs, underscore its robust operational framework. The company’s strategic transition to underground mining in Indonesia has transformed it into one of the world’s largest underground mining complexes, enhancing both volume and margins significantly.
Like other copper companies, Freeport has posted impressive financial results in recent quarters. The company posted a topline and bottom line beat in the previous quarter that drove a rally in the stock price. The stock is up 23% over the past one year.
On the date of publication, Mohammed Saqib did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
