1 Growth Stock Down 57% to Buy Right Now

Growth stock FM (TSX:FM) is a strong option for those wanting in after a major fall during the last year, leaving shares at a steal.

A few growth stocks have slipped this last week. Big Tech earnings and interest rate announcements (or lack thereof) have all influenced share prices. However, there was another growth stock that fell, and it could signal a great time to buy.

What happened?

Growth stock First Quantum Minerals (TSX: FM) slipped by about 5% this week in the poor performing market. Honestly, shares then surged right back up by 5% the next day. That being said, it’s important for investors to consider valuation as well when looking at this mineral producer.

FM stock focuses mainly on the production of copper, a supply that had a lot of issues over the year. That is, until the last quarter, when investors saw earnings surge past analyst estimates. And that should continue during the next earnings report as well.

That’s because the company announced late in January that it plans to sell 120,000 tons of copper concentrate. So let’s get into the details of this move, and whether it should send shares higher.

The details

The news that FM stock would be selling the concentrate comes after months of drama. In December, the company’s Cobre Panama mine was shut down by order of the Panama government. This occurred after protests against the mine happened all over the country.

However, FM argued that it must remove the material to “avoid possible security and health issues” in a statement. Therefore, it will be selling the copper concentrate to generate resources and cover costs. The cost to finance essential activities of preservation will reach between $15 million and $20 million per month.

So, the mine will eventually shutdown in Panama, reducing capital spending and suspending its dividend as well as putting small mines up for sale. All this will be to create cash to support the expenses of shutting down the operation.

What investors should know

This was enormous news, with the mine accounting for 78% of its operating profit in the first nine months of 2023. So now, the question is whether the growth stock is financially stable.

This is why FM stock lost about half of its share value from the move. Yet now, shares are up 38% since those 52-week lows. Certainly nowhere near their 52-week highs, but it could certainly benefit today’s investor.

In fact, there have been rumours of a takeover from companies such as Barrick Gold. And given that FM stock is one of the world’s newest and largest copper operations, it would definitely be beneficial to one of these already large companies.

Bottom line

FM stock is a growth stock not without risk, to be sure. However, those investors getting in now could be in for a huge opportunity. The company is creating cash from sales and cuts, just as with the rest of the world. It will either need to expand for more opportunities, sending shares up, or be bought up, again sending shares up.

So whatever the future holds, it looks like today’s investors can certainly look forward to more growth from this growth stock.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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