A stock poised to break out as copper prices climb — How to play it
Freeport-McMoRan (FCX) is set for a potential breakout as copper prices approach their 52-week highs, driving renewed interest in the largest global copper mining company. FCX, which generates most of its revenue from copper, is starting to outperform both the S & P 500 and its sector, signaling a bearish-to-bullish turnaround. The company’s recent earnings beat analyst expectations, reflecting strong operational performance and record production levels. FCX’s focus on innovation, including AI-driven technologies in its mining operations, positions it to meet rising global demand for copper, particularly in electronics and renewable energy sectors. With strong forward guidance for FY2025, FCX offers a compelling opportunity for investors seeking exposure to copper’s rally. @HG.1 1Y mountain Copper futures, 1 year If we review a chart, FCX is approaching a critical $39-$40 resistance level, with increasing momentum as copper prices break out above its $4.80 resistance towards its 52-week highs. FCX’s outperformance relative to the S & P 500 and its sector, combined with positive momentum, suggests a potential breakout, targeting $50 to the upside as the bearish trend reverses into a bullish phase. Bullish Thesis: Copper Strength: Copper prices approaching 52-week highs reflect strong global demand, particularly in electronics and renewable energy, benefiting FCX, which derives 72% of its revenue from copper. Operational Excellence: FCX’s Q4 FY2024 earnings showed $6.5 billion in revenue and an EPS of $0.50, beating estimates, with record production and AI-driven innovations enhancing efficiency. Positive Outlook: Forward guidance for FY2025 revenue at $25-$26 billion and a consistently positive outlook in its growth trajectory, supported by global copper demand. The trade To capitalize on FCX’s breakout potential, I’m suggesting a bull call spread that can capture the upside with a strong risk to reward ratio and limited risk. Buy the May 16, 2025 $40/47 Call Vertical @ $2.10 Debit. This entails: Buying the May 16, 2025 $40 Call @ $2.73 Selling the May 16, 2025 $47 Call @ $0.63 The maximum reward is $490 if FCX is above $47 at expiration. The maximum risk is $210 if FCX is below $40 at expiration. DISCLOSURES: (None) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
