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FCX how is this stock so low?



October 04, 2008 – Comments (4) | RELATED TICKERS: FCX , NUE , PRGN.DL

I understand the argument of a world recession, tho the slowdown really was brought on by 2 things in my opinion.  First, the world really does revolve around the US, despite all the hullabaloo of BRIC.  They sell to us plain and simple.  We aren't buying and now they are declining.  Second, all those foreign banks kept raising their interest rates to fight inflation. Well recessions tend to be the result (which is what Italy and Spain were crying about when German dominated ECB kept raisng rates).

But even still.  I look at FCX and I see a company once selling for 127 now selling for 45.  I see a company with a current PE of about 6 with a future PE of about 4.  I see that company  paying at over 3% on dividend. 

Now I like to buy companies for the long haul, and so far the "buy and hold" strategy has not been kind to me.  The only solace I have is in the dividends I get off my real life holdings.  But I look at this company, and alot of others (like NUE) and shake my head.  I understand hedge fund unwinding, but are we at a point that serious investors don't want to invest?  If any company begs to be bought it has to be this, potential global slowdown notwithstanding.  When do you want to buy it, when it hits 120?  I always thought the premise behind investing was "buy  low sell high."  Well these companies are low, and maybe they might go a LITTLE lower, but to pass the opportunity to buy these companies up at these prices seems silly.  So I bought some, and will add as it probably will drop to one dollar a share.  Just like I did with NUE, and even PRGN (people really are missing the real value to that one - locked in long term charters, high yield, low debt - baltic dry index starting to rise a little too last couple days). 





4 Comments – Post Your Own

#1) On October 04, 2008 at 6:48 AM, ikkyu2 (97.99) wrote:

Cramer mentioned FCX and NUE today.  His point was the same as yours - if they go any lower they're pure dividend plays.

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#2) On October 04, 2008 at 6:55 AM, cravenmobile (48.29) wrote:

Been going around looking for Good Buys, and this one is definately in my Radar now. Good post.

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#3) On October 04, 2008 at 8:49 AM, murphy8275 (< 20) wrote:

its a trick computer

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#4) On October 04, 2008 at 11:03 AM, TLStockPicks (95.20) wrote:

i bought in at 65 like a week or two ago but now that the worries of deflation have gotten stronger, fcx's short term prospects don't look that good.  Commodities, especially copper and other construction materials, are expected see a demand rut for the short term. There's a lot of hedge fund sell-off/unloading, and potential buyers are in a wait and see mode.  But I do think that the market's crossed the line of being conservative in its forward assumptions and entered the realm of absurd:

1) I believe that international demand for copper will pick up ahead of the US, and outpace the expectations of egocentric american investors. 

2) The Fed is more scared of deflation than anything else and will bring a two pronged attack through money supply increase (printing and pumping money into the system) and decreasing the fed rate, even if it's an overcompensation. 

3) Because there will be such overcompenstation, as well as an inevitable write up in valuations of the "questionable" assets that the gov't is buying up, once the market does recover, there will be so much money out there that there will be a period of heavy inflation where the fed will be behind the curve.  While inflation persists, investors will jump back into commodities.


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