Freeport-McMoRan Copper & Gold Inc. (FCX): Will This Copper Stock Shine Again?

Insider buying

It seems that company insiders have been starting to take advantage of Freeport’s depressed stock value. On March 1, Freeport’s Advisory Director, Mr. Bennett Johnston, bought 16,000 shares in the open market at an average price of $31.48/share, bringing the total value of the purchase to more than a half a million dollars ($503,614).

Mr. Bennett’s purchase, however, is not an isolated event, as the company’s Executive Vice President and CFO, Mrs. Kathleen Quirk, had bought 15,000 shares in January, albeit through an option exercise.

Earnings

The company reported EPS of $0.74 for the last quarter, narrowly beating the analyst estimate average of $0.72. Revenue figures for the quarter were also higher than expected ($4.51 billion compared to the consensus estimate of $4.48 billion), representing an 8.4% gain on a year-over-year basis.

Compared to Q4 2011, both sales of copper and gold increased, and the company expects this trend to continue (they project a rise of at least 7% in copper sales in America for 2013). In fact, company officers stated that they expected a growth in copper production to more than 5 million pounds for 2015.

Some point out that the company will suffer from a decrease in Chinese metal buying, but, after monetary easing policies, copper demand in China is expected to be 8.5% higher in 2013, and, as Europe slowly recovers from the recession, worldwide demand for copper should continue to rise.

At any rate, one of the strongest asset for Freeport is its diversification. The company has tried to steer away from its dependence on copper production, and has purchased two oil and gas drillers for $20 billion. This should not only make Freeport less dependent on the industrial and construction sectors (which are nonetheless expected to grow), but it should be a potential growth catalyst for the company.

Bottom line

Attractive valuations, moderately bullish analysts, and insider buying paint a positive picture of a stock that has not been driven into expensive territory in the recent bull market. The stable earnings outlook, and the potential for future growth, could make this stock a good play this year. Current prices could indicate a good entry point for interested investors. However, the stock is known to be significantly volatile, so investors should brace themselves for a bumpy ride.

The article Will This Copper Stock Shine Again? originally appeared on Fool.com and is written by Alex Bastardas.

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