The copper industry took a hit during the earlier part of last year as the COVID-19 pandemic halted production and manufacturing. Nonetheless, the industry bounced back following the resumption of economic activities and now seems poised to perform well. Notably, the International Copper Study Group (“ICSG”) estimated that global copper production is set to rebound by about 4.5% in 2021 following an estimated slump of 1.5% in 2020, as quoted in an
S&P Global Market Intelligence article
.
The report further mentioned that ICSG predicts 21.8 million tons of copper mine production in 2021 following 20.4 million tons in 2020. Moreover, copper prices rebounded and are set to rise in the future. Notably, analysts at Goldman Sachs estimated that copper prices will average around $8,625 in 2021 and reach $9,175 in 2022, as mentioned in a
CNBC article
. The article also stated that Goldman Sachs expects prices to near the record highs of 2011 when prices touched $10,170. The article mentioned that optimism surrounding the COVID-19 vaccine along with a weakened U.S. dollar lent support to copper prices which inched up following a dip to $4,600 per metric ton in March 2020. In fact, copper prices rose to $8,146 per metric ton on Jan 8, the highest closing since February 2013, as mentioned in an
S&P Global Platts article
.
Reflective of the rising copper prices and increase in demand for the metal, manufacturing activity increased in recent months following the slump in the earlier part of 2020. Per the Institute for Supply Management, the U.S. manufacturing purchasing managers’ index (“PMI”)
rose to 60.7%
in December compared to 57.5% in November, marking the eighth consecutive month of increase. Notably, the PMI was reported at 41.5% in April 2020. Moreover, China, which is one of the world’s leading consumer of copper, also saw continued expansion in its manufacturing activity for ten consecutive months, registering growth of 51.9% in December compared to 52.1% in November, as quoted in an
FXStreet article
.
Meanwhile, an improving global economy is sure to lend support to the copper industry as the metal is an integral part of the construction and manufacturing process. Notably, the World Bank estimated the global economy to
expand 4%
in 2021 following a contraction of 4.3% in 2020.
3 Copper Stocks to Watch
With the global economy poised to turnaround in 2021 as well as increasing production and rising prices, the copper industry seems to be in good shape. We have selected three copper stocks that carry a Zacks Rank #1 (Strong Buy) or 3 (Hold) and stand to benefit going forward. You can see
the complete list of today’s Zacks #1 Rank stocks here
.
BHP Group
BHP
engages in the natural resources business in Australia, Europe, China, Japan, India, South Korea, rest of Asia, North America, South America, and internationally. It operates through the Petroleum, Copper, Iron Ore, and Coal segments. The company currently has a Zacks Rank #1. The Zacks Consensus Estimate for its current-year earnings increased 24.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 59.5%.
Southern Copper Corporation
SCCO
engages in mining, exploring, smelting, and refining copper and other minerals in Peru, Mexico, Argentina, Ecuador, and Chile. The company is based in Phoenix, AZ. It currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 14.7% over the past 60 days. The company’s expected earnings growth rate for the current year is 44.9%.
Freeport-McMoRan Inc.
FCX
engages in the mining of mineral properties in North America, South America and Indonesia. The company primarily explores for copper, gold, molybdenum, silver and other metals as well as oil and gas. The company currently has a Zacks Rank #3. The Zacks Consensus Estimate for its current-year earnings increased 18.4% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.
5 Stocks Set to Double
Each was hand-picked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2020. Each comes from a different sector and has unique qualities and catalysts that could fuel exceptional growth.
Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.
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