Southern Copper Corp (USA) (PCU)

wildeagain (62.03) Submitted: 5/12/08 11:36 PM : Start Price: $36.41 PCU Score: -11.34

Check out this downgrade that brought down the stock 10 bucks last week. The following is an AP article:











Shares of Southern Copper Corp. dipped in premarket trading after an HSBC analyst cut his rating, saying the copper producer's shares are approaching a fair price.











Analyst Jordix Dominguez downgraded Southern Copper to "Neutral" from "Overweight," but edged his price target up to $128 per share from $125. He also trimmed his 2008 profit estimate.

















That's good for a laugh. A downgrade and a move up at the same time on the price target, and suggests that it is heading to a fair price. However, with a p/e of 14 and forward 10 he doesn't seem to have a clue what fair is. Also, the price of PCU was 140 when the copper price was 3.10. Now that copper is at 3.80, the price of PCU is fairly valued at 110? 30 dollars less on a 20% price jump in the commodity. Wow. This one is a real puzzler.











I feel though that Jordix has lost his way. The BRIC nations still have a huge appetite for copper and I am not close to believing this story is over. Especially vulnerable to supply issues is copper. Enjoy the dividend too by the way. It is one of the best in all of the market. Oh, one other thing: FCX is essentially a copper play too and there's a 200 dollar price target on it. It's 115 now. Geez Jordix, are you following any of this?

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