In this article, we discuss the 10 best copper stocks to buy. If you want to read about some more copper stocks, go directly to 5 Best Copper Stocks to Buy.
The copper mining industry is experiencing significant market trends that have far-reaching implications for the global landscape. These trends are crucial for understanding the current dynamics and future prospects of the industry.The demand for copper has been steadily rising, driven by various factors. Rapid urbanization and industrialization in emerging economies, such as China and India, have fueled the need for copper in infrastructure development, construction projects, and electrical wiring. Additionally, the growing adoption of electric vehicles (EVs), renewable energy systems, and advancements in technology, including 5G networks, are driving the demand for copper as a vital component in these applications.
However, the copper mining industry is facing supply constraints due to several factors. Aging mines, declining ore grades, and operational challenges in existing mining operations have led to a slowdown in production growth. Furthermore, geopolitical factors, including trade tensions, labor strikes, and regulatory changes, can disrupt the supply chain and affect the availability of copper in the market. In addition, environmental sustainability has become a significant focus in the mining industry, including copper mining. Companies are under increasing pressure to adopt sustainable practices, reduce greenhouse gas emissions, and minimize water usage.
The copper mining industry is also embracing technological advancements to improve efficiency, productivity, and sustainability. Automation, artificial intelligence, and data analytics are being utilized to optimize mining operations, reduce costs, and enhance safety. Furthermore, innovations in mineral exploration techniques are helping identify new copper deposits and improve the efficiency of resource estimation. The emphasis on responsible sourcing and ethical supply chains is gaining momentum in the copper mining industry. Companies are increasingly expected to adhere to strict social and environmental standards, ensuring the ethical extraction and processing of copper.
Consumers and investors are demanding transparency and accountability throughout the supply chain, prompting mining companies to adopt responsible sourcing practices and certifications. Understanding these market trends is vital for stakeholders in the copper mining industry. Mining companies need to anticipate and adapt to changing market dynamics to ensure long-term sustainability and profitability. Governments and regulatory bodies play a crucial role in setting policies that balance environmental concerns with the industry's economic significance.
The global market for copper is projected to experience significant growth, with an expected increase from $160.7 billion in 2022 to $176.74 billion in 2023, at a compound annual growth rate (CAGR) of 10.0%. However, the recent Russia-Ukraine war has had disruptive effects on the global economy, particularly in the short term. This conflict has led to economic sanctions, commodity price surges, and supply chain disruptions, resulting in inflation and impacting various markets worldwide. Nonetheless, the copper market is anticipated to continue expanding, reaching $254.33 billion by 2027, with a CAGR of 9.5%.
Within the copper industry, ore mining is a lucrative business. It involves a complex process that begins with extracting ore containing less than 1% copper and concludes with the production of cathodes. These cathodes are sheets of copper that are 99.99% pure and are eventually transformed into everyday items. Copper oxide and copper sulfide are the two main types of ores found in the mining process. The copper ore mining market encompasses several countries, including Australia, Brazil, China, France, Germany, India, Indonesia, Japan, Russia, South Korea, the UK, and the USA. These countries are involved in the extraction and production of copper ore.
In 2022, the Asia-Pacific region emerged as the largest market for copper ore mining. The copper ore mining industry encompasses different types, such as the refining industry, metal processing industry, chemical industry, and other related sectors. The refining industry involves the production and delivery of oil and oil products. The global copper market is expected to witness substantial growth despite the short-term disruptions caused by the Russia-Ukraine war. The market is driven by the demand for copper in various industries, including construction, transportation, and electronics.
While the ongoing conflict poses challenges, the overall outlook for the copper market remains positive, with the industry continuing to evolve and meet the demand for this versatile metal. Some of the companies that are at the forefront of copper production and could cash in on the expected boom for the metal in the long-term include Freeport-McMoRan Inc. (NYSE:FCX), Rio Tinto Group (NYSE:RIO), and Newmont Corporation (NYSE:NEM).
Our Methodology
For this article, we selected mining stocks that have interests in the copper business based on overall hedge fund sentiment. We have assessed the hedge fund sentiment from Insider Monkey’s database of 943 elite hedge funds tracked as of the end of the first quarter of 2023. The list is arranged in ascending order of the number of hedge fund holders in each firm.
Ero Copper Corp. (NYSE:ERO) is a Canadian company that engages in the exploration, development, and production of mining projects in Brazil. It has a wide range of interests in the copper business. In early April, the company announced that it anticipated consolidated copper production rising by 125% from 2022 levels to 100K-110K metric tons in 2025. The new outlook, which is a 15% increase over the previous 2025 production forecast of 92K-102K tons, was due primarily to higher anticipated mined grades in 2024-26 based on recent infill drilling.
On May 10, investment advisory Canaccord maintained a Buy rating on Ero Copper Corp. (NYSE:ERO) stock and lowered the price target to C$31.50 from C$32. Analyst Dalton Baretto issued the target update.
At the end of the first quarter of 2023, 9 hedge funds in the database of Insider Monkey held stakes worth $223 million in Ero Copper Corp. (NYSE:ERO), compared to 8 in the previous quarter worth $159 million.
Just like Freeport-McMoRan Inc. (NYSE:FCX), Rio Tinto Group (NYSE:RIO), and Newmont Corporation (NYSE: NEM), Ero Copper Corp. (NYSE:ERO) is one of the most attractive copper stocks to buy.
Southern Copper Corporation (NYSE:SCCO) is a Mexico-based mining company that focuses on the production of copper. In late April, the company announced that Q1 copper production gained 4% year-on-year to 223,573 tons. The copper company attributed the increase to a 48.5% boost in output at the Cuajone mine in Peru due to higher ore grades and a return to full operating capacity. The firm also said that gold production was on track to grow by 40% from 2022 levels to 55K-60K oz/year beginning in 2024.
On April 21, investment advisory Barclayes maintained an Equal Weight rating on Southern Copper Corporation (NYSE:SCCO) stock and raised the price target to $64 from $53, maintaining a preference for gold over other base equities in the macro environment.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in Southern Copper Corporation (NYSE:SCCO) with 723,894 shares worth more than $55 million.
BHP Group (NYSE:BHP) is an Australian natural resources firm with interests in petroleum, copper, iron, and coal. The firm owns a copper mine in Chile, as well as other copper-related assets elsewhere. On May 30, the firm announced that it had partnered with Microsoft to leverage artificial intelligence (AI) technology to enhance the recovery process at a large copper mine. By utilizing AI and machine learning algorithms, BHP aims to optimize the copper extraction and processing operations, thereby increasing productivity and efficiency. The collaboration with Microsoft will involve utilizing their Azure cloud computing platform to analyze vast amounts of geological and operational data in real-time.
On May 3, investment advisory Goldman Sachs upgraded BHP Group (NYSE:BHP) stock to Buy from Neutral with a price target of A$49.90, noting that the stock was attractively valued given the price drop since January.
Among the hedge funds being tracked by Insider Monkey, Chicago-based investment firm Citadel Investment Group is a leading shareholder in BHP Group (NYSE:BHP) with 863,916 shares worth more than $54 million.
In its Q1 2021 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and BHP Group Ltd. (NYSE:BHP) was one of them. Here is what the fund said:
“Our purchase of Australian mining company BHP Group Ltd. (NYSE:BHP) is an example of a quality company at a moderate valuation that should deliver attractive long-term returns. We believe the market has undervalued its enduring competitive advantage due to its low cost iron and copper mining operations which has allowed the company to deliver consistent profits and cash flows across the inevitable ups and downs of the global metals cycle. While the variability of commodity prices prevents BHP from scoring in the top ranks of measured quality, we are willing to bear some of that uncertainty in return for a more attractive valuation given the company’s strong business fundamentals.”
Hudbay Minerals Inc. (NYSE:HBM) operates in North and South America. The company has mined for precious metals in the Flin Flon area of Manitoba for over nine decades. The area has reserves of copper, zinc, gold, and silver. In mid-April, the firm announced that it was purchasing Copper Mountain Mining in a deal worth $439 million. The acquisition is expected to strengthen the position of the former in the copper mining sector and expand a portfolio of copper assets. The deal includes the acquisition of the Copper Mountain mine in British Columbia, Canada. The move is part of a wider strategy by Hudbay to enhance copper production and leverage the increasing demand for copper in various industries, including clean energy.
On May 18, Stifel analyst Alex Terentiew resumed coverage of Hudbay Minerals Inc. (NYSE:HBM) stock with a Buy rating and a price target of C$10.70, predicting upside driven by higher copper and gold grades at Constancia over the next three years.
Among the hedge funds being tracked by Insider Monkey, Atlanta-based investment firm GMT Capital is a leading shareholder in Hudbay Minerals Inc. (NYSE:HBM) with 30 million shares worth more than $161 million.
Vale S.A. (NYSE:VALE) is a metals mining company that concentrates on the production of iron ore, nickel, and other metals. The firm is one of the largest ones in Brazil and markets logistical services related to these metals in addition to mining and development.The firm has been actively searching for copper deposits in Peru to meet the increasing demand for this metal in the global transition towards clean energy. Despite abandoning one project in a copper-rich area in southern Peru, Vale has two other early-stage exploration projects underway. These greenfield projects require a total investment of $7 million, per reports.
On April 28, Morgan Stanley analyst Carlos De Alba maintained an Overweight rating on Vale S.A. (NYSE:VALE) stock and lowered the price target to $18 from $19, updating 2023-26 estimates to account for Q1 results and marking-to-market the forex and commodity price assumptions.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Vale S.A. (NYSE:VALE) with 22 million shares worth more than $351 million.
Just like Freeport-McMoRan Inc. (NYSE:FCX), Rio Tinto Group (NYSE:RIO), and Newmont Corporation (NYSE:NEM), Vale S.A. (NYSE:VALE) is one of the elite copper stocks to buy.
