Southern Copper Corporation (SCCO): A Bull Case Theory

Core Thesis - Southern Copper Corporation (SCCO) is positioned as a high-quality copper producer with vertically integrated operations in Peru and Mexico, benefiting from a significant reserve base and a robust growth pipeline [2][5]. Company Overview - SCCO's share price was $174.37 as of January 13th, with trailing and forward P/E ratios of 37.65 and 34.84 respectively [1]. - The company has over 112 billion pounds of copper reserves, supporting projects like Tia Maria, Los Chancas, Michiquillay, and El Arco [2]. Financial Performance - In Q3 2025, SCCO achieved record EBITDA of $1.975 billion and net income of $1.108 billion, despite a temporary decline in copper production [3]. - The net cash costs were reported at $0.42 per pound, significantly lower than peer levels, indicating a low-cost, high-margin profile [3]. Growth Prospects - Although production is expected to be at a trough in 2026-2027, a ramp-up is anticipated from 2028 onwards, driven by large-scale projects [4]. - The company's strong cash flow generation supports an attractive dividend yield, and management's experience enhances execution credibility [4]. Investment Considerations - SCCO combines low-cost production with high byproduct leverage and a visible growth pipeline, positioning it for substantial upside if commodity prices remain high [5]. - The company maintains controlled net debt and disciplined capital allocation, presenting a bullish risk/reward profile for investors seeking premium copper exposure [5]. - Comparatively, SCCO's scale and vertical integration are emphasized as key advantages over other companies in the sector [6].