Freeport-McMoRan Inc (FCX) — I last reviewed FCX stock as the Trade of the Day on Dec. 31. I recommended traders buy shares of the major natural resources miner under $6.75 with a target of $9.
FCX stock fell to a low of $3.52 on Jan. 20, where it bottomed before taking off on a tear. Shares hit a high of $14.06 in late April, quadrupling in just over two months’ time. FCX stock has since pulled back on profit-taking. And following Thursday’s 2.7% drop, it appears to be offering traders another chance to buy at an attractive price.
Capital IQ Equity Research rates FCX stock a “Buy” with a 12-month price target of $14. Its analysts note that concerns over China’s economic growth have hurt copper sentiment, which in turn, weighed on the miner’s shares. But they think this is now baked into the stock price and expect copper prices to climb this year. They also cited Freeport-McMoRan’s successful sale of unprofitable mining operations and cost cuts as positives.
With activist investor Carl Icahn disclosing a large position in FCX stock in August, we’re likely to see the company take more steps in the right direction.
Capital IQ expects Freeport-McMoRan to post a profit of 40 cents per share this year, following a loss of 8 cents per share last year.
The chart shows FCX stock executed a golden cross in April. This is a long-term buy signal in which the 50-day moving average crosses up through the 200-day.
Initial support is at the 50-day moving average at about $11. Next is the support line at $10.30, followed by the 200-day moving average at $9.19.
Traders should buy FCX stock under $11.50 with a target of $12.50 for a potential 9%-plus return. Longer-term investors would also be wise to take a position at the market price with a target of $14. If successful, they could book a nearly 25% return.
