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3 Copper Stocks to Buy for April 2022

Freeport-McMoRan (FCX) is a deleveraged business with a massive shareholder rewards plan this year.
Southern Copper Corporation (SCCO) is a consistent…

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This article was originally published by Investor Place
  • Freeport-McMoRan (FCX) is a deleveraged business with a massive shareholder rewards plan this year.
  • Southern Copper Corporation (SCCO) is a consistent performer with a highly attractive dividend profile.
  • Turquoise Hill Resources (TRQ) is a cheaply valued stock with a healthy growth runway ahead.

Source: ppart / Shutterstock

The speculative mania around commodity markets seems to be dying down. Russia’s invasion on Ukraine has plenty to do with the development. However, copper is one commodity that picked up where it left off last year and has been undeterred by the market developments. Copper stocks are rising and the market continues to be in a healthy uptrend.

The global copper market is growing at an incredible 5.33% from 2021 to 2027. The primary growth catalyst is the transition toward clean energy. Copper plays a key role in the electrification of the renewable energy and transport sectors. Moreover, copper is used everywhere, including in manufacturing, electronics and other key areas.

Here are my three picks for the best copper stocks to buy for April 2022:

FCX
Freeport-McMoRan
$50.60
SCCO
Southern Copper Corporation
$72.43
TRQ
Turquoise Hill Resources
$29.33

Copper Stocks to Buy: Freeport-McMoRan (FCX)

Freeport-McMoRan (FCX) sign on a Freeport-McMoRan office building in Phoenix, Arizona.Source: MICHAEL A JACKSON FILMS / Shutterstock.com

Freeport-McMoRan (NYSE:FCX) is one of the top copper producers globally. In addition to copper, it also produces gold and molybdenum. The company’s crown jewel is the Grasberg mine in Indonesia, which ranks among the largest copper and gold sources. Moreover, the firm also operates large-scale mines in Peru and Arizona.

2021 was a stellar year for the business, as strong copper prices helped reduce most of its debt. Operating cash flows surged during the year, generating a colossal $7.72 billion. Levered free cash flows blew up by over 380% for the year. With its net debt reduced significantly and strong internal reserves, Freeport will now focus on shareholder rewards. With a combination of repurchases and dividends, the goal is to achieve a potential $3.3 billion in rewards this year. This sets a goal of a 50% performance-based payout.

With robust copper prices, the company expects steady annual revenue growth. It estimates a healthy improvement in copper, gold and molybdenum sales for the next three years. Hence, investors should expect FCX stock to tick upwards for the foreseeable future.

Southern Copper Corporation (SCCO)

Southern Copper Corporation logo on a phone screen in front of the logo on a computer screen. SCCO stock.Source: viewimage / Shutterstock

Southern Copper Corporation (NYSE:SCCO) is a copper mining giant based in Latin America. Its headquarters is in Mexico, but it operates mines throughout the South American region. The company operates low-cost operations, allowing it to maintain a strong return on equity and dividend payouts.

Strong copper prices helped close out a tremendous year for the business. Revenues and earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 36.9% and 76.35%, respectively. With an incredible performance last year, it increased its cash balance by 37.5%.

Southern’s net income has been increasing at an impressive pace each year. Earnings have consistently been higher due to its ability to produce copper at the lowest possible margins. However, the past year was a massive step-up, as earnings per share increased by 116%. The number is head and shoulders above its five-year average and is a testament to the company’s solid execution in 2021.

The huge amounts of cash the firm generated last year were used to deleverage and fund new projects. Moreover, its shareholder rewards in the form of dividends have been spectacular. It boasts a forward yield of 5.5% with a sublime payout ratio of over 70%. As it continues to hoard cash, dividends will increase and the shareholder rewards will be enormous.

Copper Stocks to Buy: Turquoise Hill Resources (TRQ)

Source: T. Schneider / Shutterstock

Turquoise Hill Resources (NYSE:TRQ) owns and operates one of the largest copper-gold-silver mines in Mongolia. It jointly owns an international mining company called Oyu Tolgoi with the Mongolian Government. Turquoise Hill’s shareholders were in a spot of bother when the Mongolian Government threatened to halt the expansion of the Oyu Tolgoi project. However, the weight of the threat has faded away as an agreement was reached to advance the project.

The management estimates that copper production will triple over the next six years. That means that the company is looking at a massive runway ahead. On a year-over-year basis, the company has generated 83% revenue growth. Moreover, its profits have gone through the roof with triple-digit expansion in the past year. Hence, if you’re looking for relatively cheap exposure to long-term expansion in copper prices, TRQ stock is the one to bet on.

On the date of publication, Muslim Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines

Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.

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