How to Invest in Copper Stocks

Many commodities have experienced strong price increases over the last couple of years, and copper is no different.

Over the last two years, the price of copper has risen more than 100%, recently hitting an all-time high in the process. So, how can you take advantage of high copper prices? One way is by investing in copper shares. In this article, we will highlight one of the best copper stocks to watch in 2022 as well as demonstrate how to invest in copper stocks with Admirals!

Why Invest in Copper?

When copper prices are high, companies which operate in the copper industry benefit and tend to perform better. As we have already seen, copper prices have been following an upward trajectory for the last couple of years, but past performance is no guarantee of future success.

So, what does the future look like for copper demand?

Copper is a key material in construction and transport infrastructure, meaning that its demand - and, therefore, price – is positively correlated with global economic growth. In other words, when the global economy is growing, demand for copper will also grow.

Whilst global economic growth is forecast to slow down over the next couple of years (4.1% in 2022; 3.2% in 2023), demand for copper is expected to benefit from the global energy transition.

Copper is set to play a vital role in our transition to cleaner energy. Thanks to its highly efficient conductivity, copper is a key component in the construction of electric vehicles and is also an important material in renewable energy systems. Demand for both of these uses of copper is expected to grow in the coming years.

Best Copper Stocks to Watch in 2022

There are many ways in which investors and traders can gain exposure to copper, one of which is by investing in copper stocks.

It is important to note that the price of copper will not be the sole factor for a copper producing company’s success. There are many other aspects to consider when investing in a company, in particular, the fundamentals of the company in question.

Whilst the performance of copper shares may not exactly mirror the performance of the physical commodity, they are arguably more suitable for investing in copper over the long-term than using derivative products such as Contracts for Difference (CFDs).

What constitutes the best copper stocks may be subjective and differ depending on the goals and profile of each investor. However, in the following section, we have highlighted a top copper stock for investors to consider in 2022.

Freeport-McMoRan Inc.

Freeport-McMoRan is a US based company which, like Southern Copper, focusses primarily on the production of copper, but it also has significant gold mining operations. In 2021, 80% of the company’s revenue was generated from copper sales, whilst 11% came from gold.

Again, as with Southern Copper, the volume of Freeport’s copper sales make it a good option for investors who are primarily looking for exposure to the copper market. However, its smaller – but, nonetheless, significant – production of gold will appeal to those investors who are more risk averse.

This is because gold is a safe haven asset, whose price tends to be resilient to market downturns. Therefore, should there be a downturn in the commodity market, Freeport’s gold production could potentially provide value in terms of offsetting losses elsewhere.

After spending much of the previous five years moving sideways, Freeport’s share price began a strong upward trend in March 2020. In the two years ending 31 March 2022, the company’s share price grew more than 630%.

Freeport also pays a modest dividend which, based on the current share price, gives a dividend yield of around 0.7%.

Invest in Copper Stocks with Admirals

If you are interested in investing in copper shares, you will be pleased to know that, with an Invest.MT5 account from Admirals, you can buy shares in more than 2,500 listed companies and over 300 Exchange-Traded Funds (ETFs). Click the banner below to open an account with a minimum deposit of just €1!

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