The Next Commodity Supercycle? 3 Top Copper Stocks to Buy Now

Stocks to buy

Copper prices now sit at their highest level in about two years, which has catapulted copper stocks to higher highs. All thanks to supply issues. According to Mining.com,

“Disruptions at major mines have left smelters paying historically steep prices to get hold of mined ore, and Chinese plants — which produce more than half of the world’s refined copper — are moving closer to implementing a joint output cut in response. At the same time, tentative signs of a return to growth in the global manufacturing sector are raising hopes that tightening market conditions could help power copper to new records.”

Analysts over at Citi say copper prices could run even higher, averaging about $10,000 per metric ton this year. UBS analysts also say the rally is just the beginning, noting that copper is undersupplied and that investors should stay long the metal. The firm also believes demand will expand by over 3% this year, which could push copper prices to $10,500 per metric ton.

While some of the top copper stocks have already exploded higher, most could see higher highs. All on severe supply-demand issues that don’t look to cool off any time soon. That being said, here are three top copper stocks to buy and hold today.

Freeport-McMoRan (FCX)

Over the last few weeks, shares of Freeport-McMoRan (NYSE:FCX) exploded from a low of about $36 to a high of $52. While it is a bit overbought here, it’s still a strong buy opportunity. Until we start to see the supply-demand situation cool off, FCX should remain strong.

Helping, analysts at Bank of America recently upgraded FCX to a buy rating, with a price target of $59 a share. The firm cited FCX’s copper leverage, rising free cash flow, and material gold revenue as reasons for the upgrade. Analysts at Scotiabank also raised their price target on the copper stock to $55 from $49 with an outperform rating. Even RBC Capital, which has a hold rating on the stock, says the stock could hit $55 a share.

The copper company is also paying out dividend of 15 cents on May 1 to shareholders of record as of April 15. Earnings have been solid, too. In its fourth quarter, the company’s earnings per share came in at 27 cents, which beat by four cents. Revenue of $5.91 billion – up 2.6% year over year – beat by $30 million.

Hudbay Minerals (HBM)

Source: Shutterstock

Another one of the top copper stocks to buy is Hudbay Minerals (NYSE:HBM), which ran from about $4 to a high of $8 since November 2023. From here, with copper prices gaining momentum, I’d like to see HBM closer to $9.50. While it’s also a bit over-extended, it could also see higher highs on copper supply-demand issues.

Bank of America analysts like HBM, as well. The firm just upgraded it to a buy rating with a price target of $9. They also cited, “robust near-term free cash flow, a smoothed longer-term copper production profile after the Copper Mountain acquisition, debt deleveraging, material gold revenue – 27% of the company total – and an attractive valuation,” as noted by Seeking Alpha.

Earnings have been solid here, too. In its fourth quarter, EPS of 20 cents beat by six cents. Revenue of $602.2 million – up 87.5% year over year – beat by $57.63 million. Its cash position also increased to $249.8 million thanks to stronger operating cash flow, which allowed it to also cut $94.5 million of net debt.

Global X Copper Miners ETF (COPX)

Source: Chompoo Suriyo / Shutterstock.com

Or, if you want to diversify with 37 top copper names at a low cost, there’s the Global X Copper Miners ETF (NYSEARCA:COPX). With an expense ratio of 0.65%, the ETF provides results that correspond to the Solactive Global Copper Miners Total Return Index.

Fueling upside,Forecasts suggest copper consumption will reach 43mm metric tonnes by 2050, up from 26mm in 2022. However, supply may not keep up with rising demand, and such an imbalance could support copper prices and present opportunities for miners,” as noted by Global X ETFs. Top holdings of the COPX ETF include Freeport-McMoRanLundin Mining (OTCMKTS:LUNMF), Ivanhoe Mines (OTCMKTS:IVPAF), Southern Copper (NYSE:SCCO), and Teck Resources (NYSE:TECK) to name a few.

One of the best reasons to own an ETF like the COPX is that it allows you to safely diversify with some of the leading copper names in the world. All for less than $46 share at the moment.

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

Ian Cooper, a contributor to InvestorPlace.com, has been analyzing stocks and options for web-based advisories since 1999.

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