Best stocks to play the ‘explosive’ up move in copper, per Strategas

Copper prices are in the midst of a sharp rally, and there are a few stocks investors could check out to play the trend, according to Strategas. Last week, the futures contract for May delivery of copper jumped to its highest level since January 2023, touching $4.2565 on Thursday. The recent price action in the brassy metal caught the attention of Chris Verrone, head of the firm’s technical strategy and macro research team. In a Thursday report, he called out the “explosive move from copper” and identified stocks with exposure to the metal that are breaking out of their multi-year ranges. Here are a few of the U.S.-listed tickers he identified as having the highest correlation to copper in the last decade: Verrone listed Freeport-McMoRan and Southern Copper among his favorite names. These stocks, he said, “should be added to on any near-term/overbought pullbacks.” Copper mining company Freeport-McRoRan has rallied 16% this year. However, analysts are split on the stock: Just over half of those who cover Freeport-McMoRan rate it a buy, according to LSEG. The average price target suggests downside of about 3% from current levels. In January, Bernstein analyst Bob Brackett upgraded the name to an outperform rating. He called out a possible “significant catalyst” in 2024: The prospect of Indonesia extending a special mining license – known as the IUPK – for FreeportMcMoran’s Grasberg mine. “The catalyst may come to fruition soon as the Indonesian government grants a 2×10-year IUPK extension from 2041 to 2061,” Brackett wrote. Fellow miner Southern Copper has soared 28% so far this year. Half of the analysts covering the stock have a negative view, rating it underperform, per LSEG. The average price target suggests 29% downside from current levels. But last month, Jefferies bucked the trend when analyst Alejandro Anibal Demichelis upgraded the stock to a buy rating, citing an improving copper price outlook as a catalyst. He also raised his price target to $130 from $91, implying that shares could rally about 17% from their Friday close. “We believe that its integrated, open-pit, low-cost operations (particularly those in Mexico) and high copper reserve life (c50 years) differentiates SCCO from other global industry peers,” Demichelis wrote.