It’s no secret that precious metals have been crushed over the past several weeks. A variety of reasons, including talk of the Federal Reserve tapering off its monthly bond buying, as well as slowing growth in China, have served as body blows to major industrial miners such as Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX). In light of this, is now the time to run for the hills from the miners? Or can Freeport excavate serious gains for your portfolio?
Misery loves company
Over the past few weeks, copper and gold have been taken on a massive downtrend, taking the miners stocks down in tandem. At a recent price of $27, Freeport has lost a massive amount of market value in just a few months.
Freeport traded as high as $42 per share as recently as October 2012. That means that in eight months, the stock has lost 35% over the time. Looking further back, the chart is even uglier: Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) traded above $60 per share at the beginning of 2011.
As the saying goes, misery loves company, and Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX) isn’t the only miner in the copper and gold business getting crushed. Gold has lost several hundred dollars per ounce, and copper has dropped to levels not seen in years. That means pain for miners all across the board, including not just Freeport but also Southern Copper Corp (NYSE:SCCO) and international firm Rio Tinto plc (ADR) (NYSE:RIO).
Southern Copper is comparable to Freeport-McMoRan Copper & Gold Inc. (NYSE:FCX), holding a $23 billion market capitalization. Southern Copper engages in mining, exploring, producing, smelting, and refining copper and other minerals in Peru, Mexico, and Chile.
Southern Copper Corp (NYSE:SCCO), like Freeport, trades for around $27 per share, well below the $42 per share seen over the trailing 52 weeks.
That being said, Southern Copper Corp (NYSE:SCCO) trades for a price-to–earnings ratio of just 13 times and yields nearly 3%.
Rio Tinto plc (ADR) (NYSE:RIO) has considerable copper exposure, but operates a diversified mining business. The company engages in exploration, discovery, and processing of such mineral resources as aluminum, gold, silver, diamonds, coal, iron ore, and of course, copper.
Rio Tinto has a long history, having been founded in 1873, and is headquartered in the United Kingdom. It’s also the biggest copper company of the three presented here, with a market value of $75 billion. Investors interested in international diversification may also like Rio Tinto because of its extensive global footprint, operating in China, Japan, Australia, the United States, and Europe.