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Gold/Mining/Energy : Freeport McMoran (FCX) -- Ignore unavailable to you. Want to Upgrade?

To: Investor Clouseau who wrote (131)	4/28/2014 5:40:02 PM
From: Investor Clouseau	Read Replies (1) \| Respond to of 141

Why Freeport-McMoRan's Stock Is A Long-Term Investment Opportunity Right Now Apr. 27, 2014 11:49 AM ET \| About: FCX Arie Goren, Portfolio123 (535 clicks) Long only, value, research analyst, dividend investing Profile\| Send Message\| Follow (3,233) Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in FCX over the next 72 hours. (More...) SummaryAfter the retreat in its stock price, it is now an excellent opportunity for a long-term investment in FCX at a cheap price.FCX’s PEG ratio of 0.39 is one of the lowest among S&P 500 companies.FCX’s average annual earnings growth estimates for the next five years is extremely high at 27.90%.FCX’s forward annual dividend yield is quite high at 3.68%.FCX beat EPS expectations by 11.6% in its latest quarter. After beating analysts' expectations by 11.6% in its first-quarter 2014 earnings report, Freeport-McMoRan Copper & Gold Inc.'s ( FCX) stock has shown some small gain. Freeport-McMoRan's stock price has significantly declined since the beginning of the year, as copper and gold prices dropped, but it is now showing some strength, gaining 11% since March 13. However, I consider FCX's stock as a good combination of value and growth in a high-yielding dividend stock, and in my opinion, after the retreat in its stock price, it is now an excellent opportunity for a long-term investment in a good company at a cheap price. The CompanyFreeport-McMoRan Copper & Gold is the world's second largest copper producer and a major producer of gold and molybdenum. The company is also a small oil and gas producer in the U.S. Freeport-McMoRan has mines in Indonesia, North America, South America and Africa. The company was founded in 1987 and is headquartered in Phoenix, Arizona. Valuation MetricsThe table below presents the valuation metrics of FCX, and the data were taken from Yahoo Finance and finviz.com. Freeport-McMoRan's valuation metrics are extremely advantageous; the trailing P/E is very low at 12.93 and the enterprise value-to-EBITDA ratio is also very low at 6.66. According to finviz.com, FCX's next financial year forward P/E is very low at 10.99, and the average annual earnings growth estimates for the next five years is very high at 27.90%. These give an exceptionally low PEG ratio of 0.39, one of the lowest among S&P 500 companies. The PEG Ratio - price/earnings to growth ratio is a widely used indicator of a stock's potential value. It is favored by many investors over the P/E ratio, because it also accounts for growth. A lower PEG means that the stock is more undervalued. Latest Quarter ResultsOn April 24, Freeport-McMoRan reported its first-quarter 2014 financial results, which beat EPS expectations by $0.05 (11.6%). Net income attributable to common stock totaled $510 million, $0.49 per share, for first-quarter 2014, compared with net income of $648 million, $0.68 per share, for first-quarter 2013. Sales climbed to $4.99 billion from $4.58 billion. Consolidated sales for first-quarter 2014 totaled 871 million pounds of copper, 187 thousand ounces of gold, 27 million pounds of molybdenum and 16.1 million barrels of oil equivalents, compared with 954 million pounds of copper, 214 thousand ounces of gold and 25 million pounds of molybdenum for first-quarter 2013. In the report, chief officers of the company said: Our first-quarter results reflect solid operating performance in our North America, South America and Africa mining operations and a meaningful contribution from our oil and gas business, partly offset by the effects of reduced output from Indonesia and lower copper prices. We are actively engaged in reaching a resolution to enable resumption of copper concentrate exports in Indonesia. We are pleased to report substantial progress in advancing projects to increase production and cash flows from our mining and oil and gas projects and remain focused on strong execution of these value enhancing initiatives. Our large and diverse portfolio of assets and resources provide attractive near-term and longer-term growth opportunities that will enable us to increase values for shareholders by providing exposure to markets with attractive long-term fundamentals, effective management of our base operations, prudent capital management, achievement of our debt reduction initiatives and providing attractive cash returns to shareholders. DividendDuring 2013, FCX paid $2.3 billion in common stock dividends, including $1.0 billion for a supplemental dividend of $1 per share paid on July 1, 2013. FCX has a long-standing tradition of seeking to build shareholder value through investing in projects with attractive rates of return and returning cash to shareholders through common stock dividends and share purchases. FCX paid common stock dividends of $326 million in first-quarter 2014. FCX started paying dividends in 1995, but had interrupted the payments during the years 1999 to 2002 and in 2009. The forward annual dividend yield is high at 3.68%, and the payout ratio is at 85%. The annual rate of dividend growth over the past three years was very high at 26.0%, and over the past five years was also very high at 26.8%.