NEW YORK (TheStreet) -- The uses for copper are many and the demand is as strong as ever. It's a key component in home building, from the wiring in houses to ornamental exterior functions like rainspouts and roofing.Because copper can absorb a great deal of heat, it is used for piping hot water, as infrastructure for refrigerators and as a vital component for air conditioners. It is used in electrical switches and magnetrons for microwave ovens.
FCX). As FCX rightly describes itself, it is the "world's largest publicly traded copper company." It mines "geographically diverse, long-lived reserves of copper, gold and molybdenum." The company's portfolio of assets includes the Grasberg mining complex in Indonesia, which happens to be the world's largest copper and gold mine, in terms of recoverable reserves. They also own significant mining operations in the Americas, including the large scale Morenci and Safford minerals districts in North America and the Cerro Verde and El Abra operations in South America. FCX is also bullish on their mines in the highly promising Tenke Fungurume minerals district in the Democratic Republic of Congo, DRC. The main drawback in the DRC is the political risks and an ongoing civil war that flares up from time to time.
Its 2011 annual report is a must-read for all serious investors, and it spells out in details not only the past growth of this exciting company but how FCX plans on having exponential growth in 2012 and beyond. According to a recent Bloomberg News article, analysts are more bullish on the price of copper than they've been since March. "Copper traders are the most bullish in three months as China, the biggest buyer, reduced interest rates to bolster growth, increasing expectations that prices will rebound from the longest slump in two years." Now I could wow you with the key financial statistics of FCX, which are generally impressive, but the real "scoop" here is that FCX stock is so cheap that it's most likely a takeover candidate. In fact, it was Bloomberg that cranked up the rumor mill on this topic in late April of this year. In the April 17 article, Bloomberg said words that are as true today as they were then: " As of April 16, 2012, FCX was valued at 3.3 times its earnings before interest, taxes, depreciation and amortization in 2013, according to analysts' estimates compiled by Bloomberg. "That was cheaper than any other base metals producer with more than $10 billion in market value and about a third less than the median." As of June 12, Freeport's market cap was less than $23 billion at a closing price of $33.56. It is now valued around 3.48 times its EBIDTA. Still cheap indeed!