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Freeport McMoran : FCX Keeps Climbing

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08/31/2017 | 01:13 pm
After being out of favor for so long because of its oil and gas holdings, Freeport-McMoRan (NYSE: FCX) is now a star stock. Investors are bidding share higher after the earnings report and on hopes that it profits will be up on better copper prices.
Copper prices are poised to surge even higher. Inventories fell by the biggest weekly drop since 2005.
Technical charts show no meaningful patterns to predict where prices will move next. Fundamentally, copper pricing will depend on inventories in Asia and in Shanghai, China in particular.
FCX’s Grasberg copper mine currently faces disruptions. The political overhang is hurting the unit but that may end. Hopes are high that Freeport will work out a deal with Indonesia’s government that will put an end to the unknowns. The government wants favorable royalties and tax rates. In return, Freeport may operate Grasberg mine for the long-term of over 10 years.
Near-term risks are high for FCX’s Grasberg mine. The company may end up selling the unit at unfavorable rates. This would put pressure on the rally in its shares. Even if the sale is at below-market rates, Freeport-McMoran must negotiate a fair management contract that will bring in positive cash flow.
FCX stock is a winning holding but for those that missed out, waiting for a pull-back may lower the speculative risks built in its share price.

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