Freeport McMoRan’s 4Q16 Outlook: Can Its Stock Return to Life?



Freeport’s 4Q16 outlook

Freeport-McMoRan (FCX) closed at $10.86 on September 30, 2016, gaining 1.6% from its previous day’s closing. FCX was quite volatile in September, but it traded in a narrow price channel. Sideways movement has been the hallmark of Freeport’s price action for most of 3Q16, and the stock lost 2.5% in 3Q16.

Article continues below advertisement

2016 price action

Meanwhile, 2016 has been a remarkable year for Freeport-McMoRan (FCX). At the beginning of the year, few observers expected that FCX would trade above $10. However, thanks to the company’s aggressive debt reduction program and improved risk-on sentiment, the stock is trading with decent year-to-date (or YTD) gains of ~60%.

Looking at other miners, Teck Resources’s (TCK) stock rose 367% in 2016 on higher zinc and coking coal prices. Southern Copper (SCCO) is trading almost flat this year, and BHP Billiton (BHP) is trading with YTD gains of ~35%.

ETF alternatives

You can also consider the Materials Select Sector SPDR ETF (XLB) to get diversified exposure to the materials sector. Alternatively, investors who want direct exposure to copper can also consider the PowerShares DB Base Metals ETF (DBB).

DBB invests one-third of its holdings in copper. XLB is up 10.2% YTD while DBB has risen 18.2% so far in 2016.

Series overview

In this series, we’ll look at the factors that could drive Freeport-McMoRan (FCX) in 4Q16. We’ll also look at the key events and developments that FCX investors should track during the quarter.

Along with FCX’s fundamental drivers, it’s also important to look at its technical parameters. In the next article, we’ll look at Freeport-McMoRan’s crucial technical support and resistance levels.


More From Market Realist