Freeport-McMoRan Inc: A Bullish Triumph
Freeport-McMoRan Inc’s stock, trading as FCX, has recently achieved a so-called “golden cross,” with the 50-day Simple Moving Average (SMA) crossing over the 200-day SMA on Jan. 17. This development signals a bullish sentiment in the stock just a week ahead of its fourth-quarter (Q4) earnings report.
The 50-day SMA crossed over the 200-day SMA on Jan. 17, indicating a bullish trading sentiment over the stock.
Fidelity’s Bullish Stance for 2024
Fidelity has designated Freeport-McMoRan Inc as one of its five material sector picks for 2024. According to Fidelity, the global copper supplier’s business presents attractive demand-supply dynamics for the upcoming year.
Per Fidelity’s insights, Freeport-McMoRan Inc represents a compelling investment opportunity amidst challenges in copper supply. The aging mines and diminishing ore quality in key copper-producing nations point toward a potential surge in copper prices amid rising demand, positioning Freeport-McMoRan Inc as a favorable choice in the sector.
Goldman Sachs’ Encouraging Outlook
A report from Goldman Sachs’ U.S. Weekly Kickstart also suggests that Freeport-McMoRan Inc’s stock may outperform. This report highlights certain stocks with weak pricing power that are trading at a 14% P/E discount to stocks with strong pricing power, indicating a potential for outperformance.
Furthermore, the report notes that in times of enhanced profitability, investors tend to diminish the premium associated with the scarcity of robust pricing power stocks, resulting in outperformance by companies with lower pricing power and more variable profit margins. In this context, Freeport-McMoRan Inc’s historical average gross margin of 26% aligns with Goldman’s criteria for investment.
Freeport-McMoRan Inc’s stock is currently trading at a forward EV/EBITDA of 10.93, reflecting a 14% discount from its sector median of 12.65. As the company prepares to report its Q4 earnings on Jan. 24, Wall Street anticipates an EPS of 24 cents and revenue of $5.86 billion.
This golden cross triumph, coupled with positive outlooks from Fidelity and Goldman Sachs, has certainly set the stage for an exciting period for Freeport-McMoRan Inc and the copper market as a whole.
