Copper has rallied–again–to a new 10-year high and that has taken Freeport McMoRan Copper and Gold to $39.53 today, April 28, as of 3:50 p.m.. That’s above my target price in my Jubak Picks Portfolio of $34. So today I’m selling this position. The stock is up 39.34% as of 3:50 p.m. New York time since I added it to the portfolio on January 6, 2021. I still have substantial exposure to copper through my positions in Southern Copper (SCCO) in my long-term 50 Stocks Portfolio and in my Dividend Portfolio.
Back on January 26 copper miner Freeport McMoRan (FCX) dropped sharply–down 6.5%–when the company lowered guidance for production in 2021. For 2021 Freeport McMoRan expects sales of 3.8 billion pounds of copper and 1.3 million ounces of gold. In October the company guided analysts to production of 3.85 billion pounds of copper and 1.4 million ounces of gold. (Freeport-McMoRan did raised its 2022 target for copper sales to 4.3 billion pounds from 4.2 billion.) But the company did report fourth quarter earnings of 39 cents a share, matching Wall Street projections. In the fourth quarter of 2019, the company earned 2 cents a share. But…
U.S. GDP growth slowed in the fourth quarter, gaining just 1% from the third quarter. For the full year the U.S. economy contracted by 3.5%. That makes 2020 the first time that the economy has contracted for a full year since 2009 and the Great Recession. At the bottom of that recession that economy contracted by 2.5%. 2020 is also the worst year for economic growth since 1946 when the economy shrank by 11.6% as the country demobilized after World War II. Consumer spending slowed in all 15 categories tracked by the Bureau of Economic Analysis. The sectors that had powered the recovery in the third quarter–restaurants and hotels, for instance–reversed. The growth in spending on cars and health car also slowed from the acceleration in the third quarter. So why is this good news as far as the stock market is concerned?
Commodities have soared on prospects for a post-coronavirus vaccine economic recovery. And copper is one of the best commodities to own in order to invest in the recovery of the global economy–and especially the growth in the Chinese economy–as the coronavirus pandemic recedes in 2021. I already own Southern Copper (SCCO) in my Dividend Portfolio and First Quantum Minerals (FQVLF) in my Volatility Portfolio. Those stocks were up 56.83% and 77.64%, respectively, in 2020. Tomorrow, January 6, I will add shares of Freeport McMoRan Copper & Gold to my Jubak Picks Portfolio.
Today, House Speaker Paul Ryan announced a May 17 deadline for the Trump administration to submit a proposal NAFTA revision to Congress–if President Trump wants this Congress to vote on a revised agreement. The odds of an agreement emerging from current talks and moving on to Congress on that schedule are just about nil. At the same time news of significant horse trading is coming out of U.S.-China trade talks.