Four Reasons FCX Is a Long-Term Bargain
Even from an early age, I have been a contrarian. Every time the crowd is swimming in one direction, I consistently find myself being pulled by instinct to want to swim the other way. Although this has not always the best inclination on a personal basis, I have found it has enhanced my investing returns over the years. Whenever a company announces an earnings miss, disappointing guidance or has a poorly received acquisition or other strategic move that crushes the stock, I find myself looking at the company's fundamentals to see if investors are overreacting. Frequently, I will start to build a position in the temporarily impaired stock and make good profits over the long term when sentiment eventually changes.
Freeport McMoRan (FCX) is a good example of a company that recently disappointed the market but whose value story remains intact. The company, which is one of the world's largest miners of copper and gold, decided to make two simultaneous acquisitions last week to get in to the energy E&P business. The stock lost 20% of its market capitalization in two days as the market gave its decision to spend $9 billion on these energy firms a loud Bronx cheer. Reasons cited include the company overpaid for the companies, the lack of cost savings and investors are disappointed by the company adding complexity to its business in these uncertain times....180 more words left in this article. To read them, just click below and try Real Money FREE for 14 days.
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