Freeport-McMoRan Slumps: Time to Buy?
Investors didn't hear what they wanted from copper miner Freeport-McMoRan's (NYSE: FCX) first-quarter earnings presentation. The main problem came from the guidance -- the near and mid-term sales outlook is down, and near-term costs are going up. As such, it's no surprise to see the stock pummeled more than most in the latest market sell-off. So is it a buying opportunity, or does the guidance change materially impact the investment thesis? Let's take a closer look.
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As a reminder, the investment case for Freeport-McMoRan rests on the idea that copper demand is headed higher due to underlying industrial demand coupled with its increased use in electric vehicles, renewable energy, and the trend toward electrification in the economy. Meanwhile, on the supply side, rising regulations and political opposition to new projects are seen as curtailing overall industry supply. However, Freeport-McMoRan's relatively strong position -- significant producing assets in the U.S. and Indonesia and expansion opportunities -- puts it in a relatively stronger position.
Source Fool.com
