Investors may already have their eye on this commodity. The price of minerals has been surging higher and higher. And yet one still remains a little behind the scenes, and that’s copper. Copper stocks in turn have seen their share prices surge as the price passed US$10,000 recently. So what’s going on with copper stocks, and should you buy?
Why copper
Investors might consider investing in copper stocks for several reasons. Copper is a crucial industrial metal, widely used in construction, electronics, transportation, and infrastructure. As economies grow and urbanize, the demand for copper tends to increase, making it a valuable commodity to invest in.
Furthermore, copper is needed for the shift we’re seeing both in renewable energy and tech. The shift towards electric vehicles and renewable energy sources like wind and solar power requires significant amounts of copper for wiring and components. As these sectors continue to expand, the demand for copper is expected to rise, potentially increasing the value of copper stocks.
Yet while all this is happening, commodities like copper are often seen as a hedge against inflation. When inflation rises, the prices of goods and services increase, leading investors to seek assets that can retain their value. Since copper has intrinsic value and is in demand across various industries, investing in copper stocks can offer protection against inflationary pressures. Hence why the price has surged so high. But there’s a way to get in on the action.
Lundin stock
By finding companies that focus on copper production, investors can get in on the climbing price of copper – and even more upside if they find copper stocks that are doing well in today’s market. One such company is Lundin Mining (TSX: LUN).
Lundin stock has been seeing its production climb, especially when it comes to its forecast for 2024. Copper production is forecast to be 366,000 to 400,000 tonnes on a consolidated basis in 2024. What’s more, this should continue to climb through 2026.
Furthermore, cash costs are coming down on average as well. The company achieved a cash cost of $2.07 per pound of copper in 2023. This should then increase only slightly based on guidance to around $2.125 per pound. Meanwhile, as the company sees earnings grow and cash costs remain stable, Lundin stock should continue to offer a strong dividend. This currently sits at 2.27% as of writing. So with shares still trading at around $16 per share, it’s a copper stock that looks like a huge deal.
Bottom line
Analysts and economists alike are quite positive about the future of copper stocks. But of them all, Lundin stock looks like a clear winner. In fact, the consensus price target is currently at $133, as of writing. That would indicate a potential upside of 731% at the time of writing this article! And with shares already up 56% in the last year, it’s looking quite doable at this rate – especially with a balance sheet and outlook as strong as we’re seeing right now.
