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In this article, we discuss the 10 best copper stocks to buy now. If you want to skip the detailed analysis of the copper market and its recent trends, go directly to the 5 Best Copper Stocks to Buy Now.
Copper is one of the main drivers in the global economy due to its vast applications in several industries. Data Bridge Market Research analysis shows that the global copper market was valued at $304.79 billion in 2021 and is expected to reach $453.756 billion by 2029 at a CAGR of 5.10%. According to the executive co-chair of Ivanhoe Mines Ltd., Robert Friedland, copper is one of the essential commodities to combat climate change. He said:
"We're not going to have clean air or make a meaningful impact on the climate, nor are we going to be able to act on the so-called inflation reduction bill [in the U.S.], without a massive increase in demand for the copper metal."
According to MiningIntelligence data, in 2021, Chile’s Codelco produced the most significant amount of copper with 1,728 kt, followed by Freeport-McMoRan Inc. (NYSE:FCX) with 1,210 kt, and third place was secured by Glencore plc (OTC:GLNCY) with 1,196 kt of copper in 2021. You can check out the following article for a list of the biggest copper producing countries.
Recent Trends
Copper hit a record peak in May 2021 at $10,747.50 per ton. However, it faced the most significant price drop since 2011 in July 2022. In mid-July, the three-month price of copper on the London Metal Exchange was at $7,341 per ton. ANZ Bank strategist Daniel Hynes said that the copper market’s performance depends on how the global sentiment changes as U.S. Federal Reserve hikes interest rates. However, the supply constraints are expected to keep the market tight. He further added that the outlook still “looks promising.”
A problematic factor in the copper market is Chile’s recent move toward the tax reform bill, which would increase the mining royalties on any company that produces over 50,000 metric tons per annum. The government is looking toward raising taxes for high earners to fund its social reforms and programs. This tax reform bill could substantially affect copper prices as Chile is the largest copper producer in the world.
Looking Forward
According to S&P Global, decarbonization will require massive amounts of copper, which will increase its demand in the future. However, companies have avoided exploring and developing new copper projects in the last decade as they take decades to achieve commercial production. S&P Global predicts that there will be a shortage of 1.6 million tonnes by 2035. The more pessimistic prediction is that the deficit could reach 9.9 million tonnes. Daniel Yergin, vice chair of S&P Global, said:
"The challenge is that if current trends continue ... there's a huge gap. And even if you put on your roller skates and your jet burner [to realize optimistic supply growth], and everything goes right, there's still a gap, because it's enormous. And it's important to recognize that now, not in 2035."
Earlier in April, the CEO of Rio Tinto Group (NYSE:RIO) spoke to a panel about the upcoming "massive deficit" of copper supplies in the next three years. Jeff Currie, global head of commodities research at Goldman Sachs, agreed with the statement and added that the expected deficit drives the firm's $15000 per ton price target. Currie further explained that the deficit has already been flagged by numerous people. However, the market has not priced it in yet because the commodities market doesn't price in expectations.
During these bearish times for copper, some of the best copper stocks still remain stable due to their fundamentals. Those stocks include some notable names, such as Newmont Corporation (NYSE:NEM), Teck Resources Limited (NYSE:TECK), and Vale S.A. (NYSE:VALE).
Our Methodology
We carefully assessed the copper stocks and their fundamentals and chose these stocks on the basis of their growth prospects, shareholder returns, financial performance, and analyst ratings.
The hedge fund sentiment around each stock has also been added. It was taken from Insider Monkey’s database of 895 elite hedge funds at the end of the second quarter of 2022.
10 Best Copper Stocks to Buy Now
10. Glencore plc (OTC:GLNCY)
Number of Hedge Fund Holders: N/A
Glencore plc (OTC:GLNCY) is an Anglo-Swiss commodity trading and mining company. The company is involved in refining, storage, transportation, and marketing of metals and minerals, and energy products in the Americas, Europe, Asia, Africa, and Oceania. In the mining segment, the company produces copper, cobalt, nickel, zinc, lead, chrome ore, ferrochrome, vanadium, alumina, aluminum, tin, and iron ore.
Glencore plc (OTC:GLNCY) reported an impressive 1H 2022 result with revenues increasing by 40% YoY to $134.4 billion. The EBITDA of $18.92 billion represented a 119% increase, while the most significant leap was made with net income attributable to shareholders, which surged by a whopping 846% on a YoY basis to $12.09 billion.
On September 26, JPMorgan analyst Dominic O'Kane maintained an Overweight rating on Glencore plc (OTC:GLNCY) and raised his price target to 690 GBP from 640 GBP.
Newmont Corporation (NYSE:NEM), Teck Resources Limited (NYSE:TECK), and Vale S.A. (NYSE:VALE) are some of the best copper stocks along with Glencore plc (OTC:GLNCY).
9. Copper Mountain Mining Corporation (OTC:CPPMF)
Number of Hedge Fund Holders: N/A
Copper Mountain Mining Corporation (OTC:CPPMF) is a Canadian mining company that engages in copper, gold, and silver mining.
On September 28, Copper Mountain Mining Corporation (OTC:CPPMF) announced mill expansion plans for its flagship Copper Mountain mining project in British Columbia. The project will produce 65,000 tons of copper a day, up from the previous 45,000 tons per day. The initial cost for the expansion is estimated to be $237 million. The mine will produce 4.1 billion pounds of copper equivalent over 32 years of mine life. It includes an after-tax net present value at an 8% discount rate of $1.24 billion.
On October 17, Stifel analyst Alex Terentiew maintained a Buy rating on Copper Mountain Mining Corporation (OTC:CPPMF) and lowered the price target to C$2.5 from C$2.80.
8. Western Copper and Gold Corporation (NYSE:WRN)
Number of Hedge Fund Holders: 2
Western Copper and Gold Corporation (NYSE:WRN) is a Canadian exploration stage company. The company explores gold, copper, silver, and molybdenum deposits. According to the Insider Monkey database, 2 hedge funds were bullish on Western Copper and Gold Corporation (NYSE:WRN) in Q2 2022 with Mario Gabelli’s GAMCO Investors taking the top spot with 520,270 shares, worth $697,000. Renaissance Technologies was the other investment portfolio with a stake in the company with a combined value of $52,000.
Western Copper and Gold Corporation (NYSE:WRN) is one of the best copper stocks because of its flagship Casino project. According to a recent feasibility study, the estimated production cost has increased. However, due to high gold credits, the all-in sustaining costs for copper will remain negative. The Casino project inferred resources including reserves containing 21.1 million troy oz gold, 10.7 billion lb copper, and 169.5 million lb molybdenum. In addition, the project also has 20 million toz of silver.
On August 31, H.C. Wainwright analyst Heiko Ihle reiterated a Buy rating on Western Copper and Gold Corporation (NYSE:WRN)’s shares. However, the analyst lowered his price target to $2.50 from $4.75 due to the decrease in the company’s commodity price deck.
7. Nexa Resources S.A. (NYSE:NEXA)
Number of Hedge Fund Holders: 4
Nexa Resources S.A. (NYSE:NEXA) is a Luxembourg-based mining company that produces silver, gold, copper cement, lead, sulfuric acid, sulfur dioxide, copper sulfate, and limestone deposits.
On September 16, Morgan Stanley analyst Carlos De Alba upgraded Nexa Resources S.A. (NYSE:NEXA) to Overweight from Equal Weight and lowered his price target to $6.60 from $7.20. The analyst believes that the metals and mining stocks within the Americas are beginning to show value. The analyst upgraded a few stocks within the sector and noted that these upgrades are owed to deep value and self-help stories.
Nexa Resources S.A. (NYSE:NEXA) pays dividends annually. As of November 3, the company has a massive dividend yield of 6.92% and a payout ratio of 23.55%.
In Q2 2022, Renaissance Technologies held the most prominent position in Nexa Resources S.A. (NYSE:NEXA) with 445,400 shares, valued at $2.677 million. 4 hedge funds held bullish positions on the company in the second quarter.
6. Hudbay Minerals Inc. (NYSE:HBM)
Number of Hedge Fund Holders: 19
Hudbay Minerals Inc. (NYSE:HBM) is a diversified Canadian mining company that produces copper concentrates containing copper, gold, and silver; silver/gold doré and molybdenum concentrates, and zinc metals. The company operates in North and South America.
Due to improved sales volumes and realized metal prices, Hudbay Minerals Inc. (NYSE:HBM) revenues saw strong growth in the past four years. Compared to Q1, the revenues in Q2 grew by 28.9% to $404.2 million and the operating cash flow recorded an 86% quarterly growth to $96.4 million.
On August 9, Credit Suisse analyst Fahad Tariq reaffirmed an Outperform rating on Hudbay Minerals Inc. (NYSE:HBM) and lowered the price target to C$7 from C$7.50
As of Q2 2022, 19 hedge funds had a stake in Hudbay Minerals Inc. (NYSE:HBM), valued at $195.545 billion. GMT Capital had the most prominent stake in the quarter with over 30.99 million shares worth $125.9 million.
Hudbay is one of the best copper stocks along with Newmont Corporation (NYSE:NEM), Teck Resources Limited (NYSE:TECK), and Vale S.A. (NYSE:VALE).
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Disclosure: None. 10 Best Copper Stocks to Buy Now is originally published on Insider Monkey.
