In this article, we discuss the 5 best stocks to buy under $50. If you want to read our detailed analysis of the global economic situation, go directly to the 10 Best Stocks to Buy Under $50.
5. Freeport-McMoRan Inc. (NYSE:FCX)
Stock Price as of May 27: $39.65
Number of Hedge Fund Holders: 68
Freeport-McMoRan Inc. (NYSE:FCX) is an Arizona-based mining company with operations in North America, South America, and Indonesia. The company is involved in the exploration of copper, gold, molybdenum, and silver.
In its Q1 2022 results, Freeport-McMoRan Inc. (NYSE:FCX) reported strong sales growth and lower-than-expected costs. The world’s biggest copper mining company also lowered its debt significantly. The company offers a free cash flow (FCF) yield of 7%, which strengthens the case for a strong shareholder return in the form of dividends and share buyback.
Amongst the popular hedge funds holding a stake in the company, Fisher Asset Management holds a stake of $2.52 billion in Freeport-McMoRan Inc. (NYSE:FCX) as of March 31. The hedge fund increased its holdings in the company by 4% on a sequential basis.
Freeport-McMoRan Inc. (NYSE:FCX) was discussed in the Q4 2021 investor letter of Horizon Kinetics LLC. Here’s what the firm said:
“Those were some ideas about copper demand. Here are some specifics about supply. Global copper mine production in the 10 years from 2005 to 2015 rose 2.45% annually. In the next 5 years, to 2020, it increased by only 0.9% annually. Even ignoring the 2020 pandemic year, for the 4 years from to 2019, the expansion rate was 1.66%. We already have the historical context for this: the commodity price collapse prior to 2015, from a position of excess capacity.
What producers must do in that situation, because they have high fixed costs and debt expense, is curtail their exploration and development expenditures and reduce operating costs. They rely on existing mines, instead, and on their highest-grade ores and lowest-cost production. They might not actually reduce current production, but they aren’t replacing the reserves that are being slowly drawn down. You can see this at work at the individual company level.
Freeport-McMoRan will illustrate. It is the world’s third-largest copper producer, closely following Chile’s Codelco and Australia’s BHP Group. In 2014, even though Freeport sold more copper than the prior year, its revenues dropped by over 25%, and it went from $4.8 billion of operating earnings (a 22% margin) to a $(0.2) billion loss. The company’s capital expenditures peaked in 2014 at $3.86 billion and will be about $1.72 billion in 2021, meaning the company is spending 55% less now than it was seven years ago. In inflation-adjusted terms, it’s spending 61% less today than seven years ago…” (Click here to see the full text)
