Buy Freeport-McMoRan Copper & Gold On The Split Next Year (FCX)

Freeport-McMoRan Copper & Gold FCX is going to split its stock 2 for 1 next year, which is indicative that management believes in the long term viability of its shares. Stock splits are generally seen as shareholder friendly moves, despite merely being an accounting trick. It's a sign that management wants more investors to own the stock, since the thought behind it is the cheaper the share price, the easier it is to accumulate shares. The two-for-one split will take effect February 1. “The authorization of this supplemental dividend reflects the strong current cash position and significant cash flows being generated by our global operations,” said CEO James R. Moffett. “The board's decision to split the stock reflects the strong share price performance of our shares and positive outlook for our business. Our financial strength combined with the positive market environment and outlook will enable us to continue to invest aggressively in our attractive portfolio of growth projects and enable us to grow our assets while providing strong returns to shareholders.” Despite the huge run that shares have had this year, I would expect that shares will continue to outperform the broader markets, as emerging markets continue to need supplies of copper for building out their economies that simply isn't there. We've seen copper hit around $4.25 per pound recently, and we could see additional upside in 2011. I don't see it getting much higher than $4.50 per pound, but if it does, FCX will really benefit. Even at these levels, Freeport is minting money left and right. Disclosure: no position in FCX