Copper Bulls Rejoice As Freeport-McMoRan Stock Gleams With Golden Cross Triumph

Freeport-McMoRan Inc FCX stock just made a so-called “golden cross,” one week ahead of reporting fourth-quarter (Q4) earnings.

The 50-day SMA crossed over the 200-day SMA on Jan. 17, indicating a bullish trading sentiment over the stock.

Also Read: Freeport-McMoRan Upgraded; Barrick Gold Downgraded; Commercial Metals Reports Earnings; Ivanhoe Electric Advances Santa Cruz Copper Project

Fidelity’s Material Sector Pick For 2024

The stock is one of Fidelity’s 5 material sector picks for 2024. According to Fidelity, this major global copper supplier’s business has attractive demand-supply dynamics for 2024.

Per Fidelity’s insights, Freeport presents an attractive investment opportunity given the challenges in copper supply. Aging mines and diminishing ore quality in key copper-producing nations hint at a potential surge in copper prices amid rising demand, making Freeport-McMoRan a compelling choice in the sector.

Goldman Sachs Says FCX Stock Could Outperform

A Goldman Sachs' U.S. Weekly Kickstart report also suggests Freeport-McMoRan stock could outperform. The report highlighted some stocks with weak pricing power and notes that these are trading at a 14% P/E discount to stocks with strong pricing power. In addition, the relative valuation of low vs. high margin stocks is two standard deviations expensive compared to history.

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.

Accordingly, in the material sector, Freeport’s gross margin five-year history average level of 26% makes it a perfect pick on Goldman’s criteria.

Freeport-McMoRan’s stock is trading at a forward EV/EBITDA 10.93. That’s a 14% discount from its sector median of 12.65.

As Freeport-McMoRan prepares to report its Q4 earnings on Jan. 24, Wall Street expects the company to report 24 cents in EPS and $5.86 billion in revenue.

Now Read: 5 Materials Sector Stock Picks With Attractive Supply-Demand Dynamics For 2024

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