Quick Win by the Algorithm: Freeport-McMoRan Inc (FCX)

Quick Win by the Algorithm

Freeport-McMoRan Inc

On February 23th, 2016, the I Know First algorithm gave a bullish signal of 22.25 for the ticker FCX with a predictability indicator of 0.61. In accordance with the algorithm’s prediction, FCX jumped 43.51% in the following three months.

quick win

Freeport-McMoRan Inc. (FCX) is a natural resource company with a portfolio of mineral assets, and oil and natural gas resources. The Company’s segments include the Morenci, Cerro Verde, Grasberg and Tenke Fungurume copper mines, the Rod & Refining operations and the U.S. Oil & Gas Operations.

As Freeport-McMoRan’sperformance has improved, the company received two upgrades: one from Cowen that raised its price target on the stock to $15 from $10, driven by the steps being taken by Freeport to improve the state of its balance sheet, the other one from Jefferies upgraded the stock from Hold to Buy, citing “Freeport’s low cost base and capex reductions”.

One of the main factor that has driven up Freeport’s performance is the improvement in the oil business, which is the second-biggest revenue source for the company after the copper business. Indeed, in the last few weeks, Brent crude oil price has recovered to slightly less than $48 per barrel while 4 months ago, Brent was trading at less than $28 per barrel. It is evident that oil prices recovery is great news for Freeport.

In the future,  the recovery in oil prices will play a ‘key role in helping Freeport-McMoRan improve its EBITDA and cash flow profile going into the rest of the year’ . This is because Freeport possesses low cost oil assets and is deploying strategies to reduce capital investments and maintain production at the same time.

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