Freeport-McMoRan Inc (NYSE:FCX) — I last reviewed this major natural resource company, with holdings in copper, gold, molybdenum, oil and gas, on May 27 with a suggested buy price of under $11.50 and a target of $12.50. The stock made the target on July 27 at $12.56 then began a decline which ended with a low under $10 in October.
Throughout the decline, Standard & Poor’s maintained a “four-star buy” on FCX and on Nov. 22 raised their 12-month target by $3 to $18 based on improvements in the company’s balance sheet and significant leverage to copper prices.
S&P forecasts copper to be in a long-term uptrend because of basic supply/demand fundamentals. Thus, S&P is maintaining its 2016 earnings-per-share estimate at 40 cents, up from a loss of $11.31 in 2015, and raises its 2017 estimate by 15 cents to $1.25.
Following the fall to under $10 in October, FCX reversed up and in November executed a Break-Away-Gap at $12.16 to $12.78 followed by two small Continuation Gaps. This positive technical action attracted buyers who then drove the stock to over $16 by late November.
The stock retraced part of the gain in December, basing at the major support line at $13.20, and the 50-day moving average at $13.32. With sellers declining and MACD turning up close to important chart support features, FCX appears to be a strong candidate for a trade from $13.50 to $16.50 for a proposed return of over 20%.
Long-term investors may also purchase FCX for total returns projected in excess of 30% in 12 months.
