The copper market is a pivotal component within the global economic landscape. Investing in copper stocks is increasingly attractive due to the global shift toward electrification. Given the industry’s tailwinds, investors could consider buying fundamentally sound copper stocks, Southern Copper Corporation (SCCO), Glencore plc (GLNCY), and Lundin Mining Corporation (LUNMF).
Copper's superior conductivity makes it essential for Electric Vehicles (EVs), renewable energy systems, and modern infrastructure. A recent study published by the International Energy Forum (IEF) indicates that electrifying the global vehicle fleet by 2050 may demand an unrealistic increase in copper production, but aiming for 100% hybrid vehicle production by 2035 could be more feasible.
Also, the growing use of electronic devices and renewable energy systems and infrastructure projects, such as construction and urbanization, necessitate substantial copper consumption for wiring, plumbing, and architectural applications, driving the demand for copper. The global copper market is expected to grow at a CAGR of 5.1% by 2034.
Considering these encouraging trends, let’s take a look at the fundamentals of the three best copper stocks in detail.
Southern Copper Corporation (SCCO)
SCCO is an integrated producer of copper and valuable by-products. It operates the mining, exploring, smelting, and refining facilities in Peru, Mexico, Argentina, Chile, and Ecuador. Its operating segments include Peruvian operations; Mexican open-pit operations; and Mexican underground mining operations.
On August 26, backed by its strong financials, the company paid its shareholders a quarterly dividend of $0.60 per share and a stock dividend of 0.0056 shares per share of common stock.
SCCO pays an annual dividend of $2.39, which translates to a yield of 2.10% at the prevailing price levels. Its four-year average dividend yield is 4.54%. The company’s dividend payments have grown at a CAGR of 8.5% over the past five years.
The stock’s trailing-12-month EBITDA margin of 52.99% is 218.6% higher than the industry average of 16.63%. Similarly, its 26.15% trailing-12-month net income margin is 426.2% above the industry average of 4.97%. Also, its trailing-12-month ROTA of 15.47% compares favorably to the industry average of 2.35%.
SCCO’s sales for the second quarter (ended June 30, 2024) increased 35.5% year-over-year to $3.12 billion. The company reported an operating income of $1.61 billion, indicating a 78.5% growth from the prior-year quarter. SCCO’s adjusted EBITDA came in at $1.80 billion, up 61.1% year-over-year, while its net income per share grew 73.2% from the prior-year quarter to $1.23.
The consensus revenue estimate of $2.94 billion for the fiscal third quarter (ending September 2024) represents a 17.4% increase year-over-year. The consensus EPS estimate of $1.11 for the current quarter indicates a 41.6% improvement year-over-year. The company has an impressive surprise history; it surpassed the consensus EPS and revenue estimates in three of the trailing four quarters.
Over the past year, the stock has gained 51.3% to close the last trading session at $111.27.
SCCO’s POWR Ratings reflect its robust outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
SCCO has an A grade for Quality and a B for Stability. The stock is ranked #9 out of 28 stocks in the Industrial - Metals industry.
To see the other ratings of SCCO for Sentiment, Value, Growth, and Momentum, click here.
Glencore plc (GLNCY)
Based in Baar, Switzerland, GLNCY engages in the production, refinement, processing, storage, transport, and marketing of metals and minerals, and energy products across the Americas, Europe, Asia, Africa, and Oceania. The company operates through two segments: Marketing Activities and Industrial Activities.
GLNCY’s trailing-12-month asset turnover ratio of 1.88x is 179% higher than the industry average of 0.67x.
In the half year that ended June 30, 2024, GLNCY’s revenue increased 9% year-over-year to $117.09 billion. It reported adjusted EBITDA of $6.34 billion for the first half of 2024. The company’s funds from operations (FFO) were $4.04 billion, up 8.8% from the prior year’s quarter. As of June 30, 2024, its assets stood at $120.69 billion.
Analysts expect GLNCY’s revenue for the fiscal year (ending December 2024) to increase 6.3% year-over-year to $231.60 billion. Further, for the fiscal year 2025, the company’s EPS is expected to grow 19.9% year-over-year to $0.98, respectively.
GLNCY’s stock has plunged marginally intraday to close the last trading session at $10.63.
GLNCY’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, equating to a Buy in our proprietary rating system.
GLNCY has a B grade for Growth and Stability. GLNCY is ranked #6 out of 40 stocks in the Miners - Diversified industry. You can check GLNCY’s ratings for Value, Momentum, Sentiment, and Quality here.
Lundin Mining Corporation (LUNMF)
LUNMF is a diversified base metals mining company that engages in the exploration, development, and mining of mineral properties in Chile, Brazil, the United States, Portugal, Sweden, and Argentina. It primarily produces copper, zinc, gold, nickel, and molybdenum, as well as lead, silver, and other metals.
LUNMF’s trailing-12-month CAPEX/Sales of 24.98% is 218.5% higher than the industry average of 7.84%. Similarly, its trailing-12-month EBIT margin of 17.31% and 4.21% is 59.2% higher than the industry average of 10.87%.
LUNMF’s revenue for the fiscal second quarter that ended June 30, 2024, amounted to $1.08 billion, up 83.9% year-over-year. The company’s adjusted earnings and adjusted earnings per share grew 167.8% and 166.7% year-over-year to $122.10 million and $0.16, respectively.
The consensus revenue of $1.20 billion for the third quarter ending September 2024 represents a 20.6% increase year-over-year. Its EPS is expected to grow 105.4% year-over-year to $0.23 for the same quarter. Moreover, the company surpassed the consensus revenue estimates in three of the trailing four quarters.
Over the past six months, LUNMF’s stock has gained 5.5% to close the last trading session at $10.32.
LUNMF’s POWR Ratings reflect its solid prospects. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
LUNMF has an A grade for Growth. Within the Miners - Diversified industry, it is ranked #8 out of 40 stocks.
To see LUNMF’s additional ratings for Stability, Value, Momentum, Quality, and Sentiment, click here.
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SCCO shares were trading at $120.62 per share on Thursday afternoon, up $9.35 (+8.40%). Year-to-date, SCCO has gained 42.42%, versus a 21.56% rise in the benchmark S&P 500 index during the same period.
About the Author: Nidhi Agarwal
Nidhi is passionate about the capital market and wealth management, which led her to pursue a career as an investment analyst. She holds a bachelor's degree in finance and marketing and is pursuing the CFA program. Her fundamental approach to analyzing stocks helps investors identify the best investment opportunities.
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