Copper has been on a tear the past year and there is little signs of the boom slowing down. The metal is used to make nearly every technology vital to a 21st-century economy.
According to Goldman Sachs, copper prices could reach $15,000 per ton by 2025. Copper just might be not only the best investment to make in 2021, but many experts see a boom in this metal for the next 10 years. Fueled also by President Biden’s $2 trillion-plus proposed jobs package and a global push towards cleaner energy, the copper mining market is expected to reach $76.76 billion by 2022.
What to buy? These two stocks should be on any investor's radar looking to capialzie on copper.
The first, Global X Copper Miners ETF’s (COPX), is the obvious choice for investors looking for broad exposure to the industry. COPX posted 192% returns over the last 12 months versus 44.9% for the S&P (SPY).
The second is Rio Tinto (OTC: RTNTF), a London-based company with mines and processes mineral resources, including iron ore, aluminum, copper, diamonds, titanium, and borates worldwide. In addition, the company owns and operates underground mines, mills, refineries, power stations, and service facilities.
The company, in business since 1873, entered into an agreement with Turquoise Hill Resources (TRQ) on a financing plan for Oyu Tolgoi, an underground project in Mongolia last month. The mine is expected to become one of the world’s largest copper mines. In addition, Rio is capitalizing on the transition to electric vehicles from fossil fuel burning automobiles by focusing on thethe production of battery-grade lithium, the fuel that powers the batteries in EVs.
For 2020, RIO’s net cash from operating activities increased 6% to $15.88 billion while EBITDA increased 13% year-over-year to $23.90 billion. For the fiscal period ending December 31, 2021, anaysts expect revenue for the fiscal period ending December 31, 2021 to be $57.46 billion, representing 28.8% year-over-year growth. The stock has gained 81.2% over the past year, but, like the EV space, has more room to run both in the short and long-term.
There are many other copper stocks from which to choose; a smart play is to allocate the majority of your copper exposure to COPX or a similar ETF, and a smaller portion spread across several large and small cap mining players, a riskier bet offering a far bigger potential return.
CapitalWatch has no business relationship with any company whose stock is mentioned in this article. Information provided is for educational purposes only and does not constitute financial, legal, or investment advice.