In this article, we discuss 10 copper stocks to buy now as recession fears recede. If you want to see more stocks in this selection, click 5 Copper Stocks to Buy Now as Recession Fears Recede.
Copper prices reached their highest level in more than five weeks on August 10, after data reflected U.S. inflation was softer than anticipated, raising hopes that climbing interest rates would be less aggressive and mitigate recession fears. Three-month copper price on the London Metal Exchange jumped 1.3% to $8,089 per tonne, the highest level since July 1, after priorly declining to $7,889. U.S. Comex futures gained 1.9% to $3.65 per lb.
According to Reuters, Ole Hansen, head of commodity strategy at Saxo Bank in Copenhagen, said:
“Copper got a shot in the arm after a surge in risk appetite and after the dollar took a tumble.”
However, the idea of rates rising less aggressively will help the market sentiment around copper, as recession is no longer an obvious threat. According to Goldman Sachs’ wage tracker, salary increases are at a 20-year high. Economists predict that the United States might be able to achieve a soft landing instead of diving headfirst into recession, after July’s CPI data revealed that consumer prices rose at a slower rate than expected, and workers experienced a 0.5% monthly increase in real wages.
Copper and other precious metals have been extremely volatile in 2022, due to shifting growth expectations and an uncertain demand outlook. At the beginning of 2022, the price of copper reached its peak of more than $10,600 per tonne, and copper’s value rose further after Russia waged war on Ukraine, which led to a shortage of important commodities. Companies also slashed their production guidance in late July, which will contribute to higher prices. Copper demand will rise steadily as it is a critical element in energy transition, since the metal is utilized in electric vehicles, charging stations, wind turbines, and solar panels.
Some of the copper stocks in focus as recession fears recede include Freeport-McMoRan Inc. (NYSE:FCX), Rio Tinto Group (NYSE:RIO), and Vale S.A. (NYSE:VALE).
Photo by Ricardo Gomez Angel on Unsplash
Our Methodology
We selected stocks that have recently received optimistic analyst ratings as copper prices rise amid receding recession fears. These companies have strong business fundamentals and are positioned to gain amid rebounding copper demand and prices. The hedge fund sentiment around the securities is mentioned as of Q1 2022, which was gauged from Insider Monkey’s database of 900+ elite hedge funds.
Copper Stocks to Buy Now as Recession Fears Recede
10. Golden Minerals Company (NYSE:AUMN)
Number of Hedge Fund Holders: 4
Golden Minerals Company (NYSE:AUMN) is a Colorado-based precious metals exploration company that owns and operates mineral properties containing precious metals. It explores for gold, copper, silver, zinc, lead, and other minerals. On August 11, the company posted a revenue of $5.9 million, up 0.70% year over year, beating market consensus by $0.03 million.
On August 4, H.C. Wainwright analyst Heiko Ihle maintained a Buy recommendation on Golden Minerals Company (NYSE:AUMN) but lowered the price target on the shares to $0.60 from $1 after the initial assay results from the Sarita Este property.
According to Insider Monkey’s data, 4 hedge funds were bullish on Golden Minerals Company (NYSE:AUMN) at the end of Q1 2022, with collective stakes worth $209,000, compared to the same number of funds in the prior quarter, with combined stakes valued at $117,000. Jim Simons’ Renaissance Technologies is the leading stakeholder of the company, with 271,443 shares worth $136,000.
Golden Minerals Company (NYSE:AUMN) is one of the copper stocks to watch as recession fears recede, in addition to Freeport-McMoRan Inc. (NYSE:FCX), Rio Tinto Group (NYSE:RIO), and Vale S.A. (NYSE:VALE).
9. Hudbay Minerals Inc. (NYSE:HBM)
Number of Hedge Fund Holders: 19
Hudbay Minerals Inc. (NYSE:HBM) was founded in 1927 and is headquartered in Toronto, Canada. It is a diversified mining company engaged in the production of base and precious metals in North and South America. Hudbay Minerals Inc. (NYSE:HBM) sells and markets copper, gold, and silver, molybdenum concentrates, and zinc metals. On August 10, the stock registered a 22% gain for the week, despite posting mixed Q2 results. The company also reaffirmed its full-year production and operating cost guidance.
On August 10, Canaccord analyst Dalton Baretto reiterated a Buy rating on Hudbay Minerals Inc. (NYSE:HBM) and lowered the price target on the shares to C$9 from C$9.50. Similarly, RBC Capital analyst Sam Crittenden and Scotiabank analyst Orest Wowkodaw maintained an Outperform rating on the stock on August 10.
Among the hedge funds tracked by Insider Monkey, 19 funds reported owning stakes in Hudbay Minerals Inc. (NYSE:HBM) at the end of Q1 2022, up from 17 funds in the prior quarter. Thomas E. Claugus’ GMT Capital is the biggest position holder in the company, with more than 31 million shares worth $244.3 million.
8. BHP Group Limited (NYSE:BHP)
Number of Hedge Fund Holders: 19
BHP Group Limited (NYSE:BHP) was founded in 1851 and is headquartered in Melbourne, Australia. It is a resources company that operates through Petroleum, Copper, Iron Ore, and Coal segments. The company has operations in Australia, Europe, China, Japan, India, South Korea, North America, South America, and internationally. On July 18, BHP Group Limited (NYSE:BHP) missed estimates for Q4 iron ore production but the company expects to raise commodity production in 2023 after output in FY 2022 was dampened by wet weather and tight labor conditions.
On August 12, Barclays analyst Amos Fletcher reiterated an Equal Weight rating on BHP Group Limited (NYSE:BHP) and lowered the price target on the shares to 2,200 GBp from 2,250 GBp.
Among the hedge funds tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management is the biggest stakeholder of the company, with roughly 17 million shares worth $1.30 billion. Overall, BHP Group Limited (NYSE:BHP) was found in 19 hedge fund portfolios at the end of the first quarter of 2022, compared to 25 funds in the earlier quarter.
Here is what Harding Loevner has to say about BHP Group Limited (NYSE:BHP) in its Q1 2021 investor letter:
“Our purchase of Australian mining company BHP is an example of a quality company at a moderate valuation that should deliver attractive long-term returns. We believe the market has undervalued its enduring competitive advantage due to its low cost iron and copper mining operations which has allowed the company to deliver consistent profits and cash flows across the inevitable ups and downs of the global metals cycle. While the variability of commodity prices prevents BHP from scoring in the top ranks of measured quality, we are willing to bear some of that uncertainty in return for a more attractive valuation given the company’s strong business fundamentals.”
7. Turquoise Hill Resources Ltd. (NYSE:TRQ)
Number of Hedge Fund Holders: 21
Turquoise Hill Resources Ltd. (NYSE:TRQ) is a subsidiary of Rio Tinto Group, and the company is headquartered in Montreal, Canada. Turquoise Hill Resources Ltd. (NYSE:TRQ) is a mining company that explores for copper, gold, and silver deposits. On August 4, the company posted its Q2 results, reporting GAAP earnings per share of $0.41, outperforming market consensus by $0.09. The revenue of $402 million climbed 21.9% on a year over year basis, topping Wall Street estimates by $1.4 million.
On August 8, Canaccord analyst Dalton Baretto reaffirmed a Buy recommendation on Turquoise Hill Resources Ltd. (NYSE:TRQ) but lowered the price target on the shares to C$42 from C$44. The analyst said that according to Turquoise Hill Resources Ltd. (NYSE:TRQ)’s present estimates, an incremental $0.4 billion equity financing may be needed in late 2023 or early 2024, but this is largely theoretical at this point and will potentially change on an ongoing basis as estimates around the funding gap and discussions around the HOA proceed.
According to Insider Monkey’s data, 21 hedge funds were bullish on Turquoise Hill Resources Ltd. (NYSE:TRQ) at the conclusion of the first quarter of 2022, with combined stakes worth over $1 billion, compared to 12 funds in the prior quarter worth $650 million. Matthew Halbower’s Pentwater Capital Management is the biggest shareholder of the company, with 18.8 million shares valued at $565.5 million.
Here is what Massif Capital has to say about Turquoise Hill Resources Ltd. (NYSE:TRQ) in its Q4 2020 investor letter:
“Turquoise Hill remains a challenging company to evaluate and a problematic company to manage within our portfolio. The company holds rights to a world-class asset, but one with very different characteristics than Ivanhoe’s Kamoa Kakula. Kamoa is a flat, low depth, high-grade block of copper ore that is relatively easy to mine. Turquoise Hill’s OT mine is a deep underground mine with good grades and high tonnage, but it is very challenging to monetize. The planned extraction method, block cave mining, is still a relatively new approach to mining an asset in the grand scheme of things. The scale of the OT mine exacerbates the challenge. Management challenges compound technical risks. Rio-Tinto (the mine operator and developer via a 51% stake in Turquoise Hill) and Turquoise Hill seem to always be at odds with each other, and both parties seem to always be at odds with the Mongolian Government.
Although we have spent significant time underwriting the technical, managerial, and political risks associated with the investment, we are continuously surprised by how frequently issues occur for this company. With that in mind, we constructed a collar on the position during the fourth quarter, selling call options for January 2022 at a $20 strike and using the proceeds to buy January 2022 puts on the position at a $7 strike. This will allow us to confidently hold the position in the near term, knowing we have locked in a gain of at least 50% from our purchase price while still allowing for significant potential price appreciation from the current $12 price.”
6. Barrick Gold Corporation (NYSE:GOLD)
Number of Hedge Fund Holders: 45
Barrick Gold Corporation (NYSE:GOLD) is a Toronto-based company that specializes in the exploration and mining of gold and copper properties. The company has ownership interests in copper mines across Chile, Saudi Arabia, and Zambia. On August 8, Barrick Gold Corporation (NYSE:GOLD) posted a Q2 non-GAAP EPS of $0.24 and a revenue of $2.86 billion, beating market consensus estimates by $0.02 and $10 million, respectively. The company also declared a $0.20 per share quarterly dividend, payable on September 15 to shareholders of record on August 31. The forward dividend yield was 5.13%.
On July 19, Barclays analyst Matthew Murphy maintained an Overweight rating on Barrick Gold Corporation (NYSE:GOLD) but lowered the price target on the shares to $25 from $28. Copper equities are “reflecting better value at these levels,” but there are still headwinds on both macro and fundamental levels, the analyst told investors. He is “becoming less negative” but expects margin pressure to prevail. On July 20, Stifel analyst Ingrid Rico reiterated a Buy rating on Barrick Gold Corporation (NYSE:GOLD) but lowered the price target on the stock to C$35.25 from C$41.
According to Insider Monkey’s Q1 data, 45 hedge funds were long Barrick Gold Corporation (NYSE:GOLD), compared to 46 funds in the earlier quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the leading stakeholder of the company, with 26.6 million shares worth $653.2 million.
Like Freeport-McMoRan Inc. (NYSE:FCX), Rio Tinto Group (NYSE:RIO), and Vale S.A. (NYSE:VALE), elite investors are piling into Barrick Gold Corporation (NYSE:GOLD).
Here is what ClearBridge Investments International Growth EAFE Strategy has to say about Barrick Gold Corporation (NYSE:GOLD) in its Q1 2022 investor letter:
“Also within the structural bucket, we have selectively added to our commodity exposure with the purchase of Barrick Gold (NYSE:GOLD). Canadian mining company Barrick Gold is a play on operating improvements. The company has aggressively delevered its balance sheet and reduced capex spending to a lower level more permanently, directing its healthy free cash flow to dividends and buybacks.”
Click to continue reading and see 5 Copper Stocks to Buy Now as Recession Fears Recede.
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Disclosure: None. 10 Copper Stocks to Buy Now as Recession Fears Recede is originally published on Insider Monkey.
