Joy Global Inc. (JOY), Freeport-McMoRan Copper & Gold Inc. (FCX), Southern Copper Corp (SCCO): Early Signs of Improvement in China

Southern Copper is down 2% YTD.  The company is the biggest pure-play copper miner after Freeport’s acquisitions in the oil space.  The company’s PE Ratio is just over 16 and it yields 2.5% at current levels.  Southern Cooper is much less volatile than Freeport.  Southern Copper has been in on an upward trend since last summer.  As a result, buy points are less clearly defined than for Freeport.  Southern Copper’s management does have a more conservative and constant approach as well.

To gain exposure to a strengthening China, investors can buy copper producers.  As Joy Global says, commodity prices are very dependent on Chinese demand.  Copper producers should see significant upside if the price of copper begins to increase.  In the statements above, Joy Global stresses that China is in the early stages of a recovery and it may be a while until the market notices this trend.  As a result, investors should wait for lower prices on a market pullback to buy into this trend.  The recent purchasing managers’ index (PMI) data from China, which was weaker than expected, shows that there is not a big hurry to get exposure to this trend.  Both companies discussed do pay dividends though, so investors can get paid to wait for the turn to be recognized.

The article Early Signs of Improvement in China originally appeared on Fool.com and is written by Adam Jones.

Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.