Freeport-McMoRan Inc (NYSE: FCX) shares recorded strong gains since February and are up over 80% year to date. Earlier in the year, the stock faced significant pressure due to declining commodity prices. However, oil rebounded, gold rebounded and even copper rallied, so company had a chance to implement its strategy to minimize debt.
The highlights
Freeport-McMoRan was able to get lucrative valuations for sales of its copper asset, which offered considerable support for the stock. The company reported its plans to do something with its gas and oil assets and some experts projected that the entire division will be sold. This asset sale did not occur, and the firm remains slightly dependent on the oil prices.
Remarkably, Freeport-McMoRan stock price has been leading the trend of its own now. Prices of copper moved to nearly $2.00 per pound from $2.30 per pound without placing any major pressure on the firm’s shares. Copper price rebound went unnoticed, and also it was applicable for gold and oil price fluctuations.
The expectations
The strength in commodity market offered Freeport-McMoRan enough time to plan assets sales. However, it continues to focus on debt reduction plans and intends to release $1.5 billion of equity. Going by the market reaction to the news, the demand for FCX stock has been growing.
Anyone looking to short FCX shares at current levels should note that Freeport-McMoRan’s shares did not decline on dilution news. This is an indication of continuous strength. Next year will be crucial as Grasberg is in the final stage of the open pit mining.
In addition, gold sales are projected to rally to 2.5 million ounces in FY2017 from 1.7 million ounces this year. It indicates that gold prices remain a vital factor for the company. So far in this year, gold had moved steadily to new highs, and, demand for anything yellow metal related remains rich.
