Freeport-McMoRan Stock Attractive Despite Copper Price Surge

Copper has reached an all-time high, but despite this, Freeport-McMoRan's stock is still considered undervalued. The company has multiple growth initiatives and expansion projects underway, including a low-cost leaching initiative that management believes will produce 800 million pounds of copper per annum.

The miner also plans to rapidly expand production over the next few years as it brings production in Grasberg, Indonesia back online following an incident in 2025. Management estimates copper production will grow from 3.1 billion pounds in 2026 to 4.1 billion pounds in 2028.

The stock trades at attractive valuation multiples compared to historical averages, with an enterprise value (EV) to EBITDA valuation of 6.8 times and a free cash flow (FCF) multiple of 11.2 times in the 2027/2028 period. These multiples are lower than the average EBITDA multiple of 9.01x over the last decade.

Freeport-McMoRan is well-placed to benefit from the ongoing shift in structural demand for copper, driven by the electrification-of-everything megatrend and the increasing difficulty of securing greenfield mining permissions.