Today, there’s a ton of optimism in the market. Commodities are seeing bullish sentiment flood through, and copper stocks are among the ones in focus today. Three of the names on investors’ radar today are Freeport-McMoRan (NYSE:FCX), Southern Copper (NYSE:SCCO) and Rio Tinto (NYSE:RIO). These stocks are up 9%, 4% and 3%, respectively.
Why the optimism?
Well, it appears analysts are becoming increasingly bullish on copper as a recovery play. Generally, speaking copper is a gauge of broad economic demand. As an industrial metal, copper’s demand tends to have high correlation to the broader economy. As such, investors looking through the pandemic toward a new normal seem to like this metal today.
That said, a few other key factors are at play with copper’s rise of late. Let’s dive into today’s news that has sent copper stocks higher.
Goldman Sachs Drives Copper Stocks Higher Today
Today, a report was released by Goldman Sachs analyst Jeff Currie. The title of the report says it all: “Copper is the new oil.”
Indeed, Mr. Currie is bullish on the renewable energy trend. In addition to the aforementioned supply factors likely to drive copper demand, Currie notes that renewable energy development is a key focal point of the demand rise he sees as inevitable. He notes that copper plays a major role in the process of creating, distributing and storing clean energy. For those bullish on President Joe Biden’s American Jobs Plan, this is a key metal to keep an eye on today.
The Goldman Sachs analyst has placed a 2025 price target of $15,000 per ton on copper. To put that in perspective, that represents a rise of about 66% from current levels. Today, copper trades around $9,000 per ton.
That’s a big target, and it suggests there’s a real potential of a rotation in commodities toward copper. This rotation, Currie believes, could be away from oil and into copper. Indeed, if copper is viewed as a renewable energy play, such a bullish scenario doesn’t seem fantastical today.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article.