Freeport-McMoRan Up 30% in 3 Months: Buy, Sell or Hold the Stock?

Core Viewpoint - Freeport-McMoRan Inc. (FCX) shares have surged 30.1% in the past three months, driven by rising copper prices due to tight global supply, trade tariff uncertainties, and strong demand [1][6]. Group 1: Stock Performance - FCX has outperformed the Zacks Mining - Non Ferrous industry's increase of 22.3% and the S&P 500's rise of 4% during the same period [2]. - The stock has been trading above the 50-day and 200-day simple moving averages since late November 2025, indicating a bullish trend following a golden crossover on July 8, 2025 [4]. Group 2: Copper Market Dynamics - Copper prices have been volatile but generally favorable, remaining above $5 per pound in the fourth quarter of 2025, supported by robust demand from China and the U.S. [15][16]. - Structural factors such as electric vehicle adoption and renewable energy projects are driving increased copper consumption, while supply concerns are heightened by potential disruptions in major mining operations [16][17]. Group 3: Company Growth Initiatives - Freeport is focused on expanding its production capacity, with significant projects underway, including a large-scale concentrator expansion at Cerro Verde in Peru, expected to add 600 million pounds of copper annually [9]. - The company is also evaluating a major expansion at El Abra in Chile, with an estimated resource of approximately 20 billion recoverable pounds of copper [9]. - PT Freeport Indonesia has completed a new greenfield smelter, with operations starting in the second quarter of 2025, and is transitioning energy sources to reduce greenhouse gas emissions [11]. Group 4: Financial Health - FCX has a strong liquidity position, generating operating cash flows of around $1.7 billion in Q3 2025, with $4.3 billion in cash and equivalents [12]. - The company maintains a net debt of $1.7 billion, below its targeted range, and has a policy of distributing 50% of available cash to shareholders [13]. - FCX offers a dividend yield of approximately 0.5%, with a payout ratio of 19%, indicating a sustainable dividend [14]. Group 5: Cost and Volume Challenges - FCX's average unit net cash cost per pound of copper increased to $1.40 in Q3 2025, a 24% rise from the previous quarter, due to declining sales volumes [19]. - The company expects unit net cash costs to rise to $2.47 per pound in Q4 2025, with projected copper sales volumes of 635 million pounds, reflecting a significant decline [20][22]. Group 6: Earnings Outlook - Freeport's earnings estimates have been revised upward over the past 30 days for 2025 and 2026 [23]. - The stock is currently trading at a forward price/earnings ratio of 28.07X, a premium to the industry average of 24.32X [24]. Group 7: Investment Considerations - FCX is well-positioned for growth due to its expansion activities and strong financial health, but a weaker sales volume outlook and higher expected costs may pose risks [27].