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Best Mining Stocks To Buy In May

Vladimir Zernov
·2-min read

Key Insights

  • Copper prices have pulled back due to lockdowns in China. 

  • The situation with coronavirus in China has stabilized, which could provide more support to copper markets in summer. 

  • The diversified miner Teck Resources and the leading copper producer Freeport-McMoRan would enjoy strong support if copper rebounds from current levels. 

The recent market rebound was short-lived, and S&P 500 has quickly found itself under significant pressure. In this environment, traders continue to search for assets that could outperform the broader market in case the current pullback continues. In this article, we’ll take a look at two copper producers that would benefit from the rebound of copper demand in China.

Teck Resources

Teck Resources has pulled back from yearly highs but is still up by about 40% year-to-date. The company is expected to report earnings of $8.4 per share in this year and $5.77 per share in the next year, so the stock is trading at 7 forward P/E.

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Analysts do not believe that Teck Resources will be able to enjoy high commodity prices in the next year, but earnings estimates keep moving higher, which is bullish for the stock.

It looks that analysts are skeptical about the company’s performance in the next year due to worries about the health of the global economy. However, various supply chain disruptions may keep commodity prices high even in case the world economy slows down.

Freeport-McMoRan

Shares of the leading copper producer Freeport-McMoRan have been under material pressure in recent weeks as the price of copper moved to multi-month lows.

The above-mentioned concerns about the slowdown of the world economy and problems with coronavirus in China served as the key drivers for this move. Currently, Freeport-McMoRan stock is trading at 12 forward P/E, which is rather cheap.

Copper prices are sensitive to the changes in economic outlook. The recent problems were driven by lockdowns in China, which led to an increase in inventory levels and put pressure on the price of copper.

However, the situation with coronavirus in China has stabilized. Economic activity and demand for copper should increase in summer, which will be bullish for copper markets and Freeport-McMoRan stock.

To keep up with the latest earnings updates, visit our earnings calendar.

This article was originally posted on FX Empire

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