This Day On The Street
Continue to site
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

Do Strong Freeport Earnings Suggest Growth In Basic Materials?

Chris Lau, Kapitall: Will basic materials stocks follow solid Freeport earnings, and bring big returns in 2014?

Interest in basic materials stocks wavered some this month as the sector's biggest rally of the year ended with the third quarter – and high prices seem poised to descend across the board in 2013.

Read more from Kapitall: Rebound in Basic Materials: 4 Undervalued Commodities Stocks to Consider

However, as earnings come in, interest appears to be back on the rise. Freeport-McMoRan (FCX) is one mining company that reported strong quarterly earnings and raised its outlook. We decided to take a closer look at Freeport to see if there might be other opportunities in the sector. 

Solid quarter

Freeport earnings included $0.79 per share on net income of $821 million. The company sold 1.04 billion pounds of copper in the third quarter, up from 922 million pounds. Freeport shares soared after results were announced: 

Click on the interactive chart to see quarterly sales over time. 

Sales likely missed the 1.06 billion target because output in South America was lower than expected. However earnings were bolstered on the back of rising gold sales up to 305K oz from 202K oz. Production from South America was lower than previously thought, but this was balanced by higher ore grades in Indonesia. 

Average realized prices for copper dropped to $3.28 per pound, compared to $3.64 per pound last year. Oil and gas production also contributed to solid results. Average realized price for oil was $104.33 per barrel.

Where the money goes

Freeport raised its operating cash flow guidance – a measure of of a company's income that's less susceptible to accounting tricks than profit or revenue – just slightly for the fiscal year. The firm expects operating cash flow will be nearly $6 billion.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
Dividend Stock Advisor

David Peltier identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Updates with exact steps to take - BUY, HOLD, SELL
Trifecta Stocks

Every recommendation goes through 3 layers of intense scrutiny—quantitative, fundamental and technical analysis—to maximize profit potential and minimize risk.

Product Features:
  • Model Portfolio
  • Intra Day Trade alerts
  • Access to Quant Ratings
Real Money

More than 30 investing pros with skin in the game give you actionable insight and investment ideas.

Product Features:
  • Access to Jim Cramer's daily blog
  • Intraday commentary and news
  • Real-time trading forums
Only $49.95
14-Days Free
14-Days Free


Chart of I:DJI
DOW 16,790.19 +13.76 0.08%
S&P 500 1,979.92 -7.13 -0.36%
NASDAQ 4,748.3610 -32.9030 -0.69%

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs