Copper Firms Seen as Good Buy for Long Term
September 7, 2012 by Gold Editor
SOURCE:[Copper Investing News]- While the global economic crisis continues to weigh down demand for natural resources, including copper, investors should look at the metal’s long-term outlook to make the most of their investments.
Copper for three-month delivery settled 0.8 percent higher on the London Metal Exchange (LME) at $7,679 a metric ton on September 3, rising above its 100-day moving average, according to Bloomberg. In August, prices rose 0.7 percent. However, LME prices for copper for three-month delivery are way below averages of around $8,500 a metric ton seen earlier this year.
So far this year we have seen large mining companies like BHP Billiton (ASX:BHP,NYSE:BHP,LSE:BLT) —which mines copper along with other base metals predominantly iron ore — pull the plug on plans to build new mines, citing the fact that current lower prices for copper and other commodities it mines, do not justify projects whose costs run into the billions.
However according to Ed Liston, who guides an independent team of experienced analysts and writes for multiple stock trader publications, there is hope for the beleaguered mega-miners, especially when looking longer-term.
“In fact, if you have a bullish long-term outlook, maybe this is actually a good time to pick up some mining stocks at a good price,” Liston states, before adding a note of caution: “But don’t expect returns in the short to medium term.”
Freeport-McMoRan (NYSE:FCX), the world’s largest publicly-traded copper producer (Chilean state-owned Codelco is number one) is down about 4 percent so far this year and more than 21 percent in the past year. Mel Daris, a former mutual fund industry trader, wrote last month that Freeport “is shaping up to be an appealing growth stock in the materials sector for 2012. Aside from stable financials, Freeport-McMoRan is effectively improving the efficacy of its operations while overcoming obstacles that hampered production throughout recent years.”
Daris adds, “[t]hough copper prices have decreased recently, the increase in demand is outpacing supply, and is expected to push the price for copper higher, which will benefit Freeport.”