These 4 Copper Stocks Trade At Discounted Valuation Multiples Compared With Their Peers

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Copper prices climbed to a four-year high of US$3.28 per lb. recently, rallying ~11% from a low in early December. Today, we’ve identified four copper stocks and their current discounted valuation multiples.

In addition to a strong year for the base metal, which is up ~30% Y/Y, copper demand is expected to remain robust during 2018. China, which accounts for half of the global copper demand, saw imports of copper rise to 329,168 tonnes in November, up 19% Y/Y. In addition, the risk of labor strikes in Latin America could serve as a potential catalyst for copper prices. According to analysts at Citi, over 30 labor contracts, covering about five million tonnes of mine supply, are set to expire in 2018, primarily in Chile and Peru.

(All figures below in Canadian dollars)

1. Hudbay Minerals Inc. (HBM)
Base Metals

Hudbay Minerals is a Canada-based copper-zinc producer with assets in Canada (Snow Lake and Flin Flon, Manitoba) and in southeastern Peru, 100 kilometers south of Cusco.

  • Market Cap: $2,908 Million
  • Price/Cash Flows Per Share (2018): 4.5x
  • Peer Average: 6.4x
  • Month over Month Return: 14%

2. Teck Resources Ltd. (TECK.B)
Specialty Mining & Metals

Teck Resources is one of Canada’s largest resource companies with interests in 13 mines and 6 projects in Canada, Peru, Chile and the United States focused on the production and exploration of copper, zinc, coal and energy.

  • Market Cap: $18,695 Million
  • Price/Cash Flows Per Share (2018): 4.8x
  • Peer Average: 6.8x
  • Month over Month Return: 12%

3. First Quantum Minerals Ltd. (FM)
Base Metals

First Quantum Minerals produces copper, gold, nickel and zinc from seven mines and one copper smelter across six countries.

  • Market Cap: $11,802 Million
  • Price/Cash Flows Per Share (2018): 6.4x
  • Peer Average: 6.8x
  • Month over Month Return: 28%

4. Freeport-McMoRan Inc. (FCX)
Base Metals

Headquartered in Phoenix, Arizona, Freeport is the world’s largest publicly-traded copper producer. The Company’s diverse portfolio of assets, includes the Grasberg minerals district in Indonesia; one of the world’s largest copper deposits, along with the Morenci minerals district in Arizona and the Cerro Verde operations in Peru. In total, the Company has 10 operating mines, seven of which are in North America.

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Disclosure: Neither the author nor any of the principals at SmallCapPower, or their family members, own units in any of the companies mentioned above.

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