Copper prices have experienced a significant rally recently, with the futures contract for May delivery of copper reaching its highest level since January 2023 at $4.2565. This surge in copper prices has caught the attention of investors and analysts alike, signaling a potential trend worth monitoring.
According to Chris Verrone, head of technical strategy at Strategas, there are certain stocks that investors may want to consider to capitalize on the rally in copper prices. Verrone has identified stocks with exposure to copper that are breaking out of their multi-year ranges, making them attractive options for investors looking to ride the wave of the copper market.
Among the U.S.-listed tickers identified by Verrone as having the highest correlation to copper in the last decade are Freeport-McMoRan and Southern Copper. These companies have shown strong performance and are recommended by Verrone for potential investment.
Analyst Insights
While Freeport-McMoRan has rallied 16% this year, there are mixed opinions among analysts regarding its future performance. With just over half of analysts rating it a buy, there is uncertainty about the stock’s direction. On the other hand, Southern Copper has seen a 28% increase in its stock price this year, with conflicting views among analysts. However, some analysts, like Alejandro Anibal Demichelis of Jefferies, remain bullish on the stock, citing an improved copper price outlook as a key catalyst.
Potential Catalysts
One potential catalyst for Freeport-McMoRan is the prospect of Indonesia extending a special mining license for its Grasberg mine. This extension could lead to significant growth opportunities for the company and impact its stock performance in the coming years. Similarly, the integrated, low-cost operations of Southern Copper in Mexico could position the company for success in the copper market.
As copper prices continue to rise, investors have the opportunity to explore stocks with exposure to the metal for potential gains. While uncertainties exist regarding the future performance of these stocks, there are promising opportunities for those willing to navigate the fluctuations in the copper market. It is essential for investors to conduct thorough research and consider the insights of analysts before making investment decisions in this sector.