Friday, August 27, 2010

Freeport (NYSE:FCX) Ready to Take Off?

Some analysts have been getting very bullish on some metals company, with Freeport-McMoRan Copper & Gold (NYSE:FCX) being one of the top ones.

Their growth over the last 45 days or so is cited as a major factor, but I don't take that too seriously, as that seems to be a more arbitrary period picked, as you could start at the beginning of August and you would get a loss for the last month, while if you start at the July lows, you could say they gained about 15 percent.

No matter how one tries to spin it, in regard to the most important metals market as far as copper and aluminum, is China, and they've cut back on their consumption by 3 percent from last year, and even though they'll continue to grow, the rate is being cut down significantly from their concerns over the over-heated property market in urban areas.

So that will decrease demand for these metals in the short term, and there's nowhere else in the world that will make up for the slowdown in China.

With Freeport actually doing better than the underlying metals, even if prices increase in the second half, which is expected, they may have that already built into the price.

Commodities will continue to be strong, including metals, but it seems the companies like Freeport-McMoran which provide the commodities will continue to have a bumpy ride for the next couple of years at least, as economic data continue to confirm we're still in the midst of a lingering recession.

No comments: