Analysts estimate China imported nearly 200,000 tons of copper in May, the seventh consecutive month in which it bought more than 100,000 tons on the international market," says Moroney. "International prices are higher than Chinese prices, so the country doesn’t import unless it must. Strong demand from China, the world’s largest copper consumer, should support prices even if demand from Europe and North America weakens further."
The company is highly dependent upon copper for its financial performance, so if you're uncomfortable with the inherent volatility, you'll want to invest elsewhere. "Freeport estimates that a $0.20-per-pound change in the price of copper affects per-share earnings by $1.09," says Moroney. "In 2007, Freeport averaged $3.23 per pound for the 3.88 billion pounds of copper it produced, and it averaged $3.69 per pound for copper in the March quarter, and copper futures point to prices above $3.40 per pound through May 2010."
Freeport estimates that it will boost copper production by 8% this year to 4.2 billion pounds as activity at its gargantuan Grasberg mine in Indonesia moves into more favorable sections.
"Selling for less than 10 times expected year-ahead earnings of $12.34 per share, Freeport trades well below the metals and mining average of nearly 15," says Moroney, who adds that Freeport shares are "likely to reach $150 over the next 12 months."
