Freeport's copper production is estimated to grow to over 5 billion pounds by 2016 from 3.6 billion pounds in 2012 due to production expansions that are under way. Risks to the story include commodity pricing, success rates of exploration activities and geopolitical concerns.
The bottom line is that Freeport has a well-regarded management that will need time to prove its vision. Over that period of time, we believe the company will greatly benefit from the backdrop of an improving global macroeconomic environment -- which is supported by recent data in the U.S., China and now Europe.
At the same time, Freeport can demonstrate why its shares should close the valuation gap it currently possesses relative to other globally diversified exploration plays (approximately 4 times 2013 EBITDA estimates vs. its historical multiple of approximately 5 times and its peers at approximately 6 times (BHP Billiton (BHP) and Rio Tinto (RIO)). For buy-and-hold investors, this name is one that cannot be ignored.
--Written by Bryan Ashenberg in New York City.
Select the service that is right for you!COMPARE ALL SERVICES
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
- Weekly roundups
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Upgrade/downgrade alerts
- Diversified model portfolio of dividend stocks
- Alerts when market news affect the portfolio
- Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
- Real Money + Doug Kass + 15 more Wall Street Pros
- Intraday commentary & news
- Ultra-actionable trading ideas
- 100+ monthly options trading ideas
- Actionable options commentary & news
- Real-time trading community
- Options TV