BloggingStocks

Taleo Corporation (TLEO): Shares cycle through positive trading channel

Larry Schutts — 2008-07-02T10:35:00+00:00

Filed under: Good news, Hewlett-Packard (HPQ), Dow Chemical (DOW), Technical Analysis, Freep't McMoRan Copper (FCX), Stocks to Buy

Taleo Corporation (NASDAQ: TLEO) offers software that allows businesses to efficiently manage their staffing processes. Products help to automate recruitment, background screening, regulatory compliance, skills assessment and tracking of professional, hourly, and temporary employees. The firm's professional services division provides implementation and technical support. Customers range from small businesses to global enterprises. Hewlett-Packard (NYSE: HPQ), Dow Chemical (NYSE: DOW) and Freeport-McMoRan (NYSE: FCX) are among Taleo's large-cap clients.

Investors were pleased last month, when the company affirmed its Q2 EPS and revenue guidance figures. Management also said it expected this week's acquisition of talent management software maker Vurv Technology to add to its 2008 results, projecting EPS of 62 cents (60 cent consensus) and revenues of $175-$177 million ($162.8M consensus).

The news kept TLEO shares cycling through a positive eight-week trading channel. The price is currently rebounding from the base of that channel, suggesting the potential for a rise back toward the top.

Brokers recommend the issue with two "strong buys", seven "buys", six "holds" and one "underperform". Analysts expect a 42% growth rate, through the next year. The TLEO Sales Growth rate (29.67%) and EPS Growth rate (250.00%) compare favorably with industry, sector and S&P 500 averages. Institutional investors hold about 80% of the outstanding shares. Over the past 52 weeks, the stock has traded between $16.55 and $34.20. A stop-loss of $17.50 looks good here. Note that the firm is expected to release Q2 results in late July.

Larry Schutts is a contributing editor for Theflyonthewall.com and the Vice-President of Stockwinners.com. He does not hold positions in any of the stocks mentioned above.

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Freeport McMoRan (FCX): Top play in copper

Steven Halpern — 2008-06-13T13:00:00+00:00

Filed under: International markets, Newsletters, Freep't McMoRan Copper (FCX), Commodities, Stocks to Buy

"Recent weakness in commodities is just a pause to breathe , not the beginning of the end," says Yiannis Mostrous in Vital Resource Investor. His favorite copper play? Freeport-McMoRan Copper & Gold (NYSE: FCX).

"Most investors aren't able to grasp this commodities cycle's massive potential. The main reason is that few investors are willing to accept the big transformation that's taking place in several emerging market economies, led by China and India.

"We've been advocating this change for quite some time. And after several years of doing so, investors are more receptive. However, they're not totally convinced yet.

"This is the main reason this bull market in emerging markets and commodities has another strong leg up before it reaches all-time highs. But we're far from that point. Meanwhile, copper remains one of our favorite metals.

"Our long-standing recommendation to take advantage of copper's strength is Freeport-McMoRan Copper & Gold. Copper suffered from supply challenges along with investors' underestimation of its potential early in the year.

"According to industry sources, there are relatively few major copper projects coming online within next 10 years; grades are falling as the Chilean mines are aging; labor disputes continue to disrupt production; and nationalization issues present serious obstacles.

"The stock has been white-hot for the last few months, but we're still looking for great things from Freeport. It's less likely the US economy is going to melt down enough in 2008 to take down the rest of the world--particularly China, which has emerged as a key market for the red metal.

"That should keep prices high despite lower demand from the US. Also, Freeport has a rising production profile, which promises much higher earnings-and further advancement for Freeport's share price-in the coming years.

"The second half of 2008 could be particularly explosive. That's because the majority of the company's production takes place then, and it's likely to coincide with the beginning of a recovery in US demand.

"Freeport doesn't hedge because its management believes that demand for copper over the longer term is assured. We agree and continue to recommend Freeport-McMoRan Copper & Gold as a buy at current prices."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

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Fab Five: 5 promising stocks for patient investors

Joseph Lazzaro — 2008-06-05T14:50:00+00:00

Filed under: Freep't McMoRan Copper (FCX), Stocks to Buy, Potash Corp. of Saskatchewan (POT)

In a challenging market amid an uncertain U.S. economic landscape, identifying long-term, promising investment opportunities becomes a difficult task. Further, to make the investment equation even more challenging, there's election risk, as well, with the 2008 U.S. Presidential election five months away.

Still, risk-adjusted investment opportunities exist. Accordingly, here's a 'Fab Five' that should rank with the best the equity markets have to offer, 3-5 years out.

(Note: Don't buy these stocks if you're interested in a short-term trade of six months or less. These are longer-term investments where the goal is a double-digit, average, annual, total return on equity over 3-5 years.)

Potash (NYSE: POT). Current Price: $212, p/e 47. Revised Stop Loss: $170. Potash remains the best of a very good fertilizer bunch, due to its 20% global market share in the namesake fertilizer. Consider buying POT on a pull-back to $202-203, but keep in mind Potash may not retreat to that level.

Mosaic (NYSE: MOS). Current Price: $132, p/e 40. Revised Stop Loss: $97. Mosaic also is well-positioned in phosphate and crop nutrients. Further, the fact that 66% of its revenue is internationally based is especially appealing, given the U.S. economic slowdown.

Transocean (NYSE: RIG). Current Price: $144, p/e 10. Revised Stop Loss: $110. RIG offers deepwater oil drilling services in all regions of the world, and it's an oil-thirsty world.

Freeport-McMoRan (NYSE: FCX). Current Price: $114, p/e 14. Revised Stop Loss: $69. Copper / gold / molybdenum miner Freeport is one of a handful of companies that have the economies of scale to compete in the global mining sector of the early 21st century, and it boasts impressive clients, to boot. Consider buying FCX on a pull-back to $111-113, but keep in mind Freeport may not retreat to that level.

CSX Corp. (NYSE: CSX). Current Price: $66, p/e 23. Revised Stop Loss: $48. Ride the railroad resurgence with this superior trade / commodity / freight transport company. The rails are in the transportation sweet spot: truck transport costs are rising with fuel costs, and the U.S. highway system is inadequate, with increased congestion likely, pending future investment.

Top Pick: Potash.

Safest Pick: CSX Corp.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

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Cramer on BloggingStocks: Earthquake recovery can change China

Jim Cramer — 2008-05-14T09:30:00+00:00

Filed under: China, Market matters, U.S. Steel (X), United Technologies (UTX), BHP Billiton Ltd ADR (BHP), Freep't McMoRan Copper (FCX), Commodities, Stocks to Buy, Cramer on BloggingStocks

TheStreet.com's Jim Cramer says that rebuilding from natural disasters can alter the growth picture for a country.

Is it Katrina all over again? Or is it bigger? Much bigger? That's what I am thinking about this Chinese earthquake.

Katrina distorted the U.S.'s growth pattern for more than a full year. The raw materials, the effort, the work, the reconstruction affected businesses from small-scale retail to refining and infrastructure.

We don't really know how China works, although a lot of people tell us they do. To me, the Chinese are always a day away from revolution or civil war and the trick of the government is to stay one step ahead of the posse. (Chinese hands will dispute that, but you have to appreciate that it takes a special skill to be wrong for more than a century and still maintain credibility.)

That means massive reconstruction: bricks, lumber, cement, steel and all the trimmings. Massive imports, not controlled by the Chinese and their little negotiation games like they play with iron and steel and coal. Just full-bore buying and something that could take growth for China back to the levels that everyone thought it couldn't absorb without more inflation.

I know that it is simplistic to think that we will get our fair share of orders here, but just like we didn't expect the price of chicken to be moved dramatically by ethanol, there is only so much chicken feed to go around. This could stimulate another round of price increases for building materials like steel (U.S. Steel (NYSE: X) (Cramer's Take)) and all that goes into it (Cleveland-Cliffs (NYSE: CLF) (Cramer's Take), Vale (NYSE: RIO) (Cramer's Take), BHP Billiton (NYSE: BHP) (Cramer's Take)). Everything from elevators -- United Technologies (NYSE: UTX) (Cramer's Take) -- to fire prevention to copper wiring, which is why I started buying Freeport (NYSE: FCX) (Cramer's Take) again yesterday.

The theme gets new life from this earthquake which, when the smoke clears, will be revealed as the largest reconstruction project the world may have ever seen.

The groups seem overextended, as overextended as the financials are crushed.

But it doesn't matter. The raw materials remain in short supply, the ships in short supply, and the situation is combustible like Katrina, and could add more than a percentage to Chinese growth.

Worth playing.

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Mining trio: Iron ore, aluminum and copper

Steven Halpern — 2008-04-30T10:48:00+00:00

Filed under: International markets, China, Brazil, Newsletters, Freep't McMoRan Copper (FCX), Commodities, Stocks to Buy

"There's no doubt about it: vital resources are in a bull market of gigantic proportions," note Yiannis Mostrous and Roger Conrad.

"The co-editors of Vital Resource Investor caution that "no market moves in a straight line, and in commodities, the action is often extremely violent." However, for long-term investors, they offer some favorites in iron ore, aluminum and copper.

"All commodity bull markets are ultimately gored by demand destruction, alternatives and new supply. But it will almost certainly be years before that happens to this one. And that means plenty of money will be made along the way.

"We're still extremely bullish on iron ore as the market remains in deficit and prices continue to rise. Chinese domestic supply has been falling and, if this continues, imports will make up the difference, thereby helping the miners.

"China consumes 51% of the world's iron supply. Portfolio holding Companhia Vale do Rio Doce (NYSE: RIO), the world's largest iron ore producer, will benefit from the shortage in iron ore supply.

"We favor aluminum in the industrial metals sector. We've been advocating aluminum for some time, and the market's finally going our way. Aluminum prices have been impacted by lack of available power in China and South Africa and higher alumina and bauxite prices.

"It's also an undersupplied metal and, therefore, we expect prices to stay higher for longer. Supply is also stretched, especially in a historical context as emerging market demand resets the metal's base price. Asia and Europe consume 67% of total production.

"Australia-based Alumina Ltd. (NYSE: AWC) is the best-leveraged play to the aluminum story. The company owns 40% of Alcoa World Alumina and Chemicals, which, in turn, holds the world's largest, low-cost portfolio of quality bauxite and alumina assets.

"We're big fans of copper and our favorite play is Freeport-McMoRan Copper & Gold (NYSE: FCX). The stock hasn't performed as well as we hoped. But low global inventories should start supporting copper prices--at least by the second half of the year--as demand for restocking starts rising.

"Last year marked the sixth year in the row that copper mine production dipped below planned levels by as much as 1 million tons. Labor disruptions and other technical issues particularly hurt production. Start positioning your portfolio now in preparation for the eventual bounce in copper."

Each day, Steven Halpern's TheStockAdvisors.com offers the latest market commentary and favorite investment ideas from the nation's leading financial newsletter advisors.

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Analyst upgrades: AstraZeneca, Massey Energy, Freeport McMoRan

Eric Buscemi — 2008-04-15T12:25:00+00:00

Filed under: Analyst reports, Analyst upgrades and downgrades, Freep't McMoRan Copper (FCX)

MOST NOTEWORTHY: AstraZeneca, Massey Energy and Freeport McMoRan were today's noteworthy upgrades:

Dresdner Kleinwort upgraded shares of AstraZeneca (NYSE: AZN) to Buy from Hold following the company's settlement with Ranbaxy on the Nexium patent.
Massey Energy (NYSE: MEE) was raised to Overweight from Neutral at Massey Energy citing the company's leverage to metallurgical coal prices in 2009.
Freeport McMoRan (NYSE: FCX) was upgraded at HSBC to Overweight from Neutral on valuation.

OTHER UPGRADES:

Arcelor Mittal (NYSE: MT) was upgraded to Buy from Hold at Citigroup.
Merrill upgraded Bernis (NYSE: BMS) to Neutral from Sell.

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Cramer on BloggingStocks: We need one plan

Jim Cramer — 2008-04-09T08:50:00+00:00

Filed under: Market matters, JPMorgan Chase (JPM), Federal Natl Mtge (FNM), Washington Mutual (WM), U.S. Steel (X), Economic data, Deere and Co (DE), Freep't McMoRan Copper (FCX), Politics, Stocks to Buy, Stocks to Sell, Housing, Potash Corp. of Saskatchewan (POT), Recession

TheStreet.com's Jim Cramer says that until we have some clarity on the way out, we'll have a tough road ahead.

This is a confusing moment, for the same reason as always -- the darned mortgage market. Dueling plans seem destined to go nowhere while defaults continue to go up. We need something to stabilize the house price depreciation and someone to take the hit: FHA, Fannie Mae (NYSE: FNM) (Cramer's Take), Freddie Mac (NYSE: FRE) (Cramer's Take)? I don't care.

The president's plan sounds like it tries to address who should take the hit -- a little bit bank, a little bit government -- but it is piecemeal, as is everything that has been done about this issue.

I am and have been banking on an expanded FHA plan that would put the onus on that organization to do long, low-interest-rate loan guarantees. It is a simple plan, and I bet the government would make money from it. It would end the madness of trying to figure out how to deal with each one of these stopgappers.

Regardless, I think the confusion of dueling plans makes things tough going.

And we no doubt will revert to the coal/ag/nat gas trade until oil comes in at some point.

Which it doesn't look like it will.

So round up the usual suspects: Potash (NYSE: POT) (Cramer's Take), Apache (NYSE: APA) (Cramer's Take), Deere (NYSE: DE) (Cramer's Take), Monsanto (NYSE: MON) (Cramer's Take), U.S. Steel (NYSE: X) (Cramer's Take) and Freeport-McMoRan (NYSE: FCX) (Cramer's Take)!

Random musings: There is no way this TPG infusion should value Washington Mutual (NYSE: WM) (Cramer's Take) above $10 -- the fact that there was an $8 takeunder on the table by JPMorgan (NYSE: JPM) (Cramer's Take) says that.

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Freeport is a top-tier miner

Joseph Lazzaro — 2008-04-03T14:06:00+00:00

Filed under: Freep't McMoRan Copper (FCX), Commodities, Stocks to Buy

Readers of this space know that the investment bias is toward large-cap companies with demonstrated business models and a competitive advantage in established markets, preferably with a favorable global trend as a support. And with this in mind, Freeport-McMoran is worth a review.

Globally-oriented miner Freeport-McMoran (NYSE: FCX) is the world's second-largest copper producer and a major miner of gold and molybdenum. Further, FCX's purchase of Phelps Dodge in 2007 means that it has proven and probable reserves of: copper, 75 billion pounds; gold, 128 million ounces; and molybdenum, 1.9 billion pounds, net minority interests.

But perhaps most important, Freeport is one of only eight companies that have the economies of scale to compete in the global mining sector of the early 21st century. Look for continued merger/acquisition talk in the sector, but don't think of Freeport as an acquisition play: FCX has a large portion of the global copper market, geographical diversification, and enduring relationships with key customers, among other strengths, to continue to perform well in the years ahead. The Reuters F2008/F2009 EPS consensus estimates for FCX are $10.07/$11.07.

Further FCX's p/e of 12 is reasonable given its advantageous market position and prospects for growth. Don't expect Freeport's ascent to be perfect and calm, given its dependence on commodity prices, but that does not blot-out the secular trends that point to good things for FCX's in the years ahead.

The risks? Freeport's copper segment would be hurt by a global economic downturn.

The First Call mean rating for FCX is: Buy [19 firms]. Mean 2008 target: $117.00 [high: $135, low: $65.00].

Stock Analysis: Freeport is a moderate-risk stock not suitable for low-risk investors. Investors should expect above-average volatility with FCX. Don't buy FCX if your portfolio already contains a mining/mineral component. Investors with an investment horizon longer than two years should be rewarded from FCX's shares. Sell / Stop Loss if you were to buy shares in this company: $68.

Disclosure: Lazzaro has no positions in stocks. In addition to private real estate holdings, he owns corporate and municipal bonds, and cash certificates of deposit.

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Option Update: Freeport McMoRan volatility elevated as gold approaches $1000

Paul Foster — 2008-03-11T10:10:00+00:00

Filed under: Options, Freep't McMoRan Copper (FCX)

Freeport McMoRan (NYSE: FCX), a gold and copper mining company, closed at $93.97 Monday.

Gold is recently up 1.23% to $983.80 according to Bloomberg.

FCX overall option implied volatility of 56 is above its 26-week average of 50 according to Track Data, suggesting larger price movement.

Option Update is provided by Stock Specialist Paul Foster of theflyonthewall.com

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Fund roads & bridges NOT mad money stimulus

Sheldon Liber — 2008-03-04T17:43:00+00:00

Filed under: Management, Rants and raves, Competitive strategy, General Electric (GE), Home Depot (HD), Scandals, Caterpillar (CAT), Alcoa Inc (AA), Black and Decker (BDK), Lowe's Cos (LOW), U.S. Steel (X), Nucor Corp (NUE), Reliance Steel and Aluminum (RS), Johnson Controls (JCI), Deere and Co (DE), Honeywell Intl (HON), United Technologies (UTX), BHP Billiton Ltd ADR (BHP), Rio Tinto plc ADS (RTP), Freep't McMoRan Copper (FCX), Politics, Commodities

It is alarming to me that the same people who screw up the economy (or stand by watching) are the ones that are now promoting the remedies. They have proven without a shadow of a doubt that this is not their strong suit. The proposed economic stimulus package has bi-partisan support and calls for an estimated $156 billion of tax rebates ranging from $500 to $1,000 (+ $300 for each child) that might show up in May.

If we are going to add on to our already humungous joke of national debt, than I want to invest this capital in something that will bring a higher return on invested capital (ROIC) than the paltry one time mad money. That expenditure should be for national infrastructure projects like roadways, bridges, tunnels, and waterways.

We have all heard about the poor condition of our national infrastructure and the hundreds of billions of dollars of repair work and replacement that is desperately needed.

This alternative would bring visible results that every single person in the country would benefit from and improved linkages always stimulate economic growth. Road improvements even reduce fuel consumption by shortening routes and reducing friction both strategically and physically.

Furthermore, this form of stimulus goes directly to support middle and lower income workers, the ones hurt by the severe downturn in the construction industry. The government, like private enterprise, benefits when it can borrow cheaply and invest at higher returns. This has been historically true of infrastructure projects.

Giving people a one time hand out is like giving your kids some cash for the week end. They will enjoy it while it lasts and it won't last long. However, building something usable will have a benefit for several generations.

If you are interested in a few stocks that would benefit from this type of investment you might add the following to your watch list:

Alcoa Inc (NYSE: AA) -- aluminum
BHP Billiton Ltd ADR (NYSE: BHP) -- raw materials
The Black & Decker Corporation (NYSE: BDK) -- hand tools
Caterpillar Inc. (NYSE: CAT) -- heavy equipment
Cemex SAB de CV (ADR) (NYSE: CX) -- concrete
Deere & Company (NYSE: DE) -- heavy equipment
Freeport McMoRan Copper (NYSE: FCX) -- raw materials
General Electric Company (NYSE: GE) -- building systems
The Home Depot, Inc. (NYSE: HD) -- construction supply
Honeywell International, Inc. (NYSE: HON) -- building systems
Jacobs Engineering Group, Inc. (NYSE: JEC) -- engineering
Johnson Controls, Inc. (NYSE: JCI) -- building systems
Lowe's Companies, Inc. (NYSE: LOW) -- construction supply
Nucor Corporation (NYSE: NUE) -- steel
Reliance Steel & Aluminum (NYSE: RS) -- specialty metals
Rio Tinto plc (ADR) (NYSE: RTP) -- raw materials
United States Steel Corporation (NYSE: X) -- steel
United Technologies Corporation (NYSE: UTX) -- building systems
URS Corporation (NYSE: URS) -- engineering

All of these do not present the same value and some of them, being conglomerates will be effected less than more focused companies. For example, I would expect CX or NUE to receive more benefit than GE or UTX.

On a related note: Suburban slums -- city centers being revitalized

Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure: I do not own shares of any of these stocks except for CX. RS is one of my 2008 picks.

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Rio Tinto's value seen enhanced by high-price gold mine sale

Joseph Lazzaro — 2008-02-22T15:35:00+00:00

Filed under: Alcoa Inc (AA), Barrick Gold (ABX), BHP Billiton Ltd ADR (BHP), Rio Tinto plc ADS (RTP), Freep't McMoRan Copper (FCX)

Rio Tinto's above-consensus sale price for its gold mine to Barrick Gold almost certainly increases Rio's negotiating stance vis-a-vis takeover bids from BHP Billiton or from other potential suitors, an analyst told BloggingStocks Friday.

"Rio's sale of its gold mine to Barrick for $1.7 billion when the market was expecting something like $570-$700 million is a fundamental data point the market cannot ignore," independent stock analyst C. Leonard Bauer said Friday. "It will force BHP Billiton and others receptive to a deal to redo their fair-value projections for Rio."

Rio (NYSE: RTP) has twice rejected hostile buyout offers from BHP Billiton (NYSE: BHP), the last for $147.4 billion, involving at least 3.4 BHP shares for each Rio share, arguing that the bids substantially undervalue Rio. Rio gained 64 cents to $452.89 while BHP gained $1.01 to $72.89 in Friday afternoon trading.

At first glance, the idea of bidding wars for targets appears to be a paradox in the current economic environment. After all, the U.S. economy is barely inching along, and the credit markets can be described, at best, as being cautious regarding potential deals. But the mining sector is another story, Bauer said. Strong economic growth in emerging markets has created surging demand for raw materials, minerals, and commodities. Further, the sector is in the midst of mergers and expansions that will produce miners with global market capabilities.

Iron ore war?

The above demand, particularly from Asia, Bauer said, has offset recent, modest quarterly earnings performance from some miners, and has driven up the value of miners like Rio and Freeport McMoRan (NYSE: FC).

In addition, China's size and its economic development plan has further increased miners' value. China, which with Alcoa (NYSE: AA) earlier this year jointly purchased a 9% stake in Rio Tinto through its Chinalco aluminum company, has said it will continue to seek acquisitions of foreign companies, including mining companies, Bauer said. Bauer added that he does not have a rating on any mining company nor own their shares.

"China may ultimately try to outbid BHP because a BHP / Rio union would unite two of the three largest suppliers of iron ore, which China needs for its economy," Bauer said. "A BHP / Rio union would likely leave China in a weaker negotiating position regarding iron ore prices. So you can see why Rio feels BHP's offers so far have not valued the company fairly. Rio knows that as long as China grows, it has a commodity likely to increase in value substantially for years to come. And that's a good place to be in, from a corporate standpoint."

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Freeport-McMoran (FCX) lifted by gold and copper gains

Brent Archer — 2008-02-21T12:46:00+00:00

Filed under: Good news, Industry, Options, Technical Analysis, Freep't McMoRan Copper (FCX), Commodities

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) shares are rising this morning, helped by rising copper and gold prices. Copper is higher by more than 2% today, while gold is up by about 1% on concerns about inflation in a lower interest rate environment. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on FCX.

After hitting a one-year low of $52.51 in March, the stock hit a one-year high of $120.20 in October. FCX opened this morning at $100.26. So far today the stock has hit a low of $99.40 and a high of $102.82. As of 11:20, FCX is trading at $101.71, up $2.38 (2.4%). The chart for FCX looks neutral and improving, while S&P gives the stock a positive 4 STARS (out of 5) buy rating.

For a bullish hedged play on this stock, I would consider an April bull-put credit spread below the $75 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 6.4% return in just two months as long as FCX is above $75 at April expiration. Freport McMoran would have to fall by more than 27% before we would start to lose money.

FCX hasn't been below $75 since August and has shown support around $92 recently. This trade could be risky if the demand for copper falls due to futher economic weakening, but even if that happens, this position could be protected by the support the stock might find just below $80, where it bounced last month.

Brent Archer is an options analyst and writer at Investors Observer. At publication time, Brent neither owns nor controls positions in FCX.

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Serious Money: Gold & platinum hit new highs

Sheldon Liber — 2008-02-21T10:45:00+00:00

Filed under: Freep't McMoRan Copper (FCX), Serious Money, Commodities, Anglo Amer ADR (AAUK), Stocks to Buy, Best Stocks for 2008

It was only yesterday that I wrote about Freeport McMoRan Copper & Gold (NYSE: FCX), noting the favorable metrics and that I put it on my watch list. And this morning I find that Gold & platinum prices soared to new highs, with gold futures setting a new record of $952.40 an ounce.

It seems investors the world over are rediscovering the precious metal after years of neglect. How could you expect anything else with social unrest, war and recession fears on the front pages of every newspaper, with China and India growing rapidly, placing high demand on all commodities, and with a head-in-the-sand administration just now lifting itself up to take a gander at the last few months of its dubious leadership.

Despite recession fears, there is also the serious possibility of dramatic inflation in the next few years based on deficit spending, the ever expanding federal government and lack of concern for the value (buying power) of the currency. It's pitiful. Gold has been an historic hedge against inflation, so why should now be any different?This has ignited one of my 2008 picks Chasing Value: Anglo American (AAUK) is down...but!, which has moved up sharply in the last week.

I do not know where the ceiling is on gold prices, but it does not seem historically high, and I still think AAUK and FCX belong on everyone's watch list.

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Chasing Value: Everybody loves Freeport McMoRan Copper & Gold (FCX)

Sheldon Liber — 2008-02-20T17:39:00+00:00

Filed under: International markets, Freep't McMoRan Copper (FCX), Chasing Value, Commodities, Stocks to Buy

There seems to be a general consensus; everybody loves Freeport McMoRan Copper & Gold (NYSE: FCX). The problem is when I look at the metrics I do too. Every company would like to have such problems. Yesterday the stock closed up over 4% to $97.94 and was even higher during the day.

Just this morning Morgan Stanley raised earning estimates to $10.95 a share, stating the company stands to benefit from higher copper prices giving FCX an 'Overweight' rating and $125 price target. Last month Goldman Sachs (NYSE: GS) added Freeport-McMoRan to its Conviction Buy list. There were also favorable stories in Barron's and Smart Money recently.

It makes me uncomfortable to be in the same camp with a multitude of analysts and financial journalists. What is the contrarian position? I suppose that would be if copper prices do not hold up. If copper and gold prices stay where they are the metrics portray this stock as a screaming buy. James Cramer would probably be throwing things by now.

Lets start with the numbers that fly off the page: a return-on-equity of almost 29% (TTM) and a return-on assets about 23% with net profit margins at 18%. The current P/E ratio is 13 (TTM) as of today. It also pays a 1.8% dividend yield

Mining is a capital intensive business and FCX also has a debt hangover from from its acquisition last year of Phelps Dodge which was head quartered in Phoenix, AZ, too. However, FCX is a star performer generating good free cash flow despite its obligations.

From what I have been able to gather Freeport insiders were buyers all the way up to about the $70 range in the first half of 2007. When the stock was near it's high of $120 per share insiders became sellers. I am not a buyer at today's price although I think it is possible that it returns to its past high this year. Today it closed at $99.33, up again.

This one goes on my watch list with an alert at $90 where I will revisit a possible buy in. I just need that value investor margin of safety.

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Commodity futures may not be ideal for every investor

Joseph Lazzaro — 2008-02-19T17:00:00+00:00

Filed under: Freep't McMoRan Copper (FCX), Commodities, Oil, Agriculture

As commodity indexes surged to record highs Tuesday, an economist and analyst offered time-tested advice on the macroeconomic and portfolio implications of the market's latest investment obsession of the moment.

Economist Glen Langan told BloggingStocks Tuesday that the steep climbs in soybean, wheat, platinum, coal and gasoline all speak to, for the most part, a secular trend that the world's major economic regions will have to address at some point: rising commodity prices that outstrip the developed and developing worlds' ability to absorb those price increases.

Langan said demand for commodities and raw materials remains above average, even as prices have risen, due to strong emerging market economic growth. Typically, after extended bull runs, either demand recedes or prices drop. Prices, so far, haven't dropped. The UBS Bloomberg Constant Maturity Commodity Index gained as much as 2.8% to 1,441.593, the highest ever, Bloomberg News reported Tuesday. "So unless we've suspended a law of economics, growth in these regions has to slow, at least somewhat," Langan said.

In developing economies, Langan said there is third economic scenario -- but it's likely to be temporary: a period of high inflation and strong economic growth. Government subsidies could prolong the high inflation/strong growth period, "but eventually both businesses and consumers cutback their purchase of the high cost commodity and/or find substitutes." The most likely outcome: demand for the high cost commodity decreases, and economic growth slows, he said.

In developed countries, the current economic condition is more serious, he said. These economies have to deal with high commodity prices amid sluggish economic growth; and in the case of the United States, amid very sluggish economic growth. Here, Langan said, consumers and businesses almost certainly will cutback their purchases, slowing the economy further. "And that doesn't present the most positive picture for commercial activity from a consumer/business demand standpoint," he said. "The last thing you want during sluggish economic times is for businesses to pull back the reins on spending, because it removes needed stimulus from the economy. So if it comes to this, there may have to be a public policy response to address it."

Typical investor: Avoid commodity futures

For the typical investor, the advice is straightforward: resist the temptation to play the commodities futures market, independent stock analyst C. Leonard Bauer told BloggingStocks Tuesday. Most investors, Bauer said, do not have the training, experience, temperament, or time to successfully trade commodities. "There are exceptions, but these are rare," he said.

A better way to capitalize on the current bull market in commodities? Bauer said research and identify a company that's well-positioned to profit from a long-term bullish trend, preferably one that's global. For example, demand for copper will remain strong for the immediate years ahead and a strong company in this segment is mining company Freeport-McMoRan (NYSE: FCX), he said. Another: given expanding agricultural activity in developing markets, fertilizer giant Potash (NYSE: POT) would be worth a review. For the oil and oil services boom, Bauer said offshore drilling contractor Transocean (NYSE: RIG) is worth evaluating. Bauer added that he does not have a rating on or own shares of Freeport, Potash, or Transocean.

"Commodity-based stock plays may not be as exciting as commodity futures, but more than likely, your investment performance will be better," Bauer added.

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Cramer on BloggingStocks: Of course bond turmoil isn't affecting stocks

Jim Cramer — 2008-02-15T09:18:00+00:00

Filed under: Cisco Systems (CSCO), General Electric (GE), Wal-Mart (WMT), Intel (INTC), General Motors (GM), Exxon Mobil (XOM), Market matters, McDonald's (MCD), AT and T (T), 3M Corporation (MMM), Caterpillar (CAT), Halliburton (HAL), Schlumberger Limited (SLB), Citigroup Inc. (C), Johnson and Johnson (JNJ), Altria Group (MO), Bank of America (BAC), Merrill Lynch (MER), Kellogg Co (K), ConocoPhillips (COP), Verizon Communications (VZ), Wachovia Corp (WB), Nucor Corp (NUE), Honeywell Intl (HON), United Technologies (UTX), Freep't McMoRan Copper (FCX), Wells Fargo (WFC), Cramer on BloggingStocks

TheStreet.com's Jim Cramer says balance sheets are strong, so spillover isn't an issue.

I get emails and postings almost every day from fixed-income specialists, saying that the credit markets' myriad problems simply aren't being reflected in the equity markets, and that's just plain wrong. They warn us equity players that we are dreamers and that it is just a matter of time before the terrible problems in collateralized debt, huge leverage, and now auction rate preferred notes spill over into equities and that any rally in stocks is just a fool's paradise.

There's a problem with this inevitability story though, one that eludes these critics and might continue to elude them -- it hasn't happened yet, despite a year's worth of turmoil. That's a long time for a big problem like this to be cordoned, so it is worth looking at whether the naysayers are wrong and something else is at work.

When I look around at the vast choices of assets out there for the thousands of fund managers and institutions that have to put their money somewhere -- provided it is not dedicated to a particular asset from the get-go -- I see one world in chaos and another world in order. The bond market, the credit market, is in total disarray, with every aspect of its existence save Treasuries under fire. We know now that a simple reset market for municipals is failing because, of course, the charade of the bond insurers and their chimerical protection. The CDO market stinks. This is a multibillion dollar market where no one can figure out the prices of anything and the spreads between the bid and the ask are so wide that no one can afford to own or trade them. You don't know where they are marked. You don't know what's in them. You don't know what they are really rated. They are basically worth nothing right now to anyone. Commercial paper? Hardly worth the pick-up in interest. "Cash reserves"? We have seen the "buck" supported over and over again. There has to be a moment where the buck is broken.

I've even heard lots of reservations about agency paper issued by the government-sponsored agencies, although these I question because if they don't work, then it is the end of the credit world.

And then there's stocks. With the exception of companies in finance and autos, the balance sheets of corporate America are unbelievably strong. They are banks, where the banks are trying to figure out the best the best way to return capital: buybacks, accelerated buybacks or dividends. I have seen pieces of research during this period where the issue is "too much cash," like the piece this week from Goldman Sachs about CF Industries (NYSE: CF) (Cramer's Take), the ag play. When you look at an Altria (NYSE: MO) (Cramer's Take) or a 3M (NYSE: MMM) (Cramer's Take) or a General Electric (NYSE: GE) (Cramer's Take), you see so much cash you have to figure that their dividends are much safer than so much of what is offered in the credit markets, and after taxes, they simply can't be beat.

When you go through the major tech companies -- which at one time would have needed cash -- you find coffers brimming. Just think of the dividend that Cisco (NASDAQ: CSCO) (Cramer's Take) could have, or how much Intel (NASDAQ: INTC) (Cramer's Take) could raise its dividend. Look at the drug companies with their outsized dividends they have no problems paying. The balance sheet of Johnson & Johnson (NYSE: JNJ) (Cramer's Take) is better than even the best bank. The cyclicals have incredible balance sheets: United Technologies (NYSE: UTX) (Cramer's Take), Honeywell (NYSE: HON) (Cramer's Take), Caterpillar (NYSE: CAT) (Cramer's Take) -- they have tons of cash.

AT&T (NYSE: T) (Cramer's Take) and Verizon (NYSE: VZ) (Cramer's Take), even after all the deployment they do, have huge excesses of cash. It's over and over, every industry: Wal-Mart (NYSE: WMT) (Cramer's Take) in retail, VF (NYSE: VFC) (Cramer's Take) in apparel, General Mills (NYSE: GIS) (Cramer's Take) and Kellogg (NYSE: K) (Cramer's Take) in food, McDonald's (NYSE: MCD) (Cramer's Take) in restaurants, Nucor (NYSE: NUE) (Cramer's Take) in steel, Freeport (NYSE: FCX) (Cramer's Take) in copper, Exxon (NYSE: XOM) (Cramer's Take), Schlumberger (NYSE: SLB) (Cramer's Take), Conoco (NYSE: COP) (Cramer's Take), Halliburton (NYSE: HAL) (Cramer's Take) in oil and gas. These are the safest in the game.

The bond market can't hold a candle to the liquidity in the stock market and the non-levered balance sheets of the players. Companies like Citigroup (NYSE: C) (Cramer's Take) and Merrill (NYSE: MER) (Cramer's Take) are frantically trying to "shrink" their balance sheets, take in less debt and borrow less money. They can't. They need every penny. So do Bank of America (NYSE: BAC) (Cramer's Take) and Wachovia (NYSE: WB) (Cramer's Take). Only Wells Fargo (NYSE: WFC) (Cramer's Take) of the major banks seems in decent shape.

So, the dichotomy is rooted in fact. The issue is empirical not emotional. Stocks aren't reflecting bonds because they shouldn't reflect them.

That's the real issue. I will be driving this home multiple times on air because I keep hearing these concerns on air. The crisis and chaos of fixed income isn't spilling over because it shouldn't. The crisis is about disorderly markets with hard-to-value securities, no insurance backstop, and no natural buyers.

The opposite is true in stocks.

So the two shall NOT meet. It's just plain logical. Random musings: Best line I have heard in a while -- "If you want AAA, buy batteries."

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Jim Cramer is a director and co-founder of TheStreet.com. He contributes daily market commentary for TheStreet.com's sites and serves as an adviser to the company's CEO. At the time of publication, Cramer was long Citigroup, ConocoPhillips, Freeport, Goldman Sachs, McDonald's, Altria and Schering-Plough. At the time of publication, Cramer had no positions in the stocks mentioned.

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Companhia Vale do Rio Doce (RIO): Strong play on iron ore

Steven Halpern — 2007-12-06T16:10:00+00:00

Filed under: International markets, Newsletters, BHP Billiton Ltd ADR (BHP), Rio Tinto plc ADS (RTP), Freep't McMoRan Copper (FCX), Commodities, Stocks to Buy

According to Roger Conrad and Yiannis Mostrous, "Resource stocks are by nature volatile. The important thing is we're still very much in a long-term bull market. And when the market mood does shift, today's pain will convert very quickly to massive gain."

In Vital Resource Investor they explain, "There is ongoing consolidation in this sector and the recent setback in stock prices make deals more attractive for acquirers." Here, they look at Companhia Vale do Rio Doce (NYSE: RIO), a play on consolidation in the iron ore industry.

"And when the market mood does shift, today's pain will convert very quickly to massive gain. The long-term underpinnings for vital resources are strong as ever: Soaring demand from the world's emerging growth engines, a growing scarcity of easily accessed supplies, rising development costs, resurgent resource nationalism and ongoing sector consolidation.

"It's this last trend that's captured our attention lately. Importantly, when it comes to developing vital resources profitably, size is essential. This year has already witnessed two mega-deals: Freeport Copper & Gold (NYSE: FCX) has bought Phelps Dodge and Rio Tinto (NYSE: RTP) purchased Alcan.

"And we're certain to see many more announced in coming months. The recent dance between BHP Billiton (NYSE: BHP) and its giant rival suggest the need to get bigger is greater than ever. Even if it doesn't succeed, the proposed merger is already increasing rivals' urge to merge.

"One of our key objectives with Vital Resource Investor is to spot potential merger candidates. Our rule is to avoid anything we wouldn't want to own if there were no deal. Happily, the best-run companies tend to fetch the biggest takeover premiums, making them the juiciest merger bets as well.

"Companhia Vale do Rio Doce (NYSE: RIO) is a potential bet on iron ore consolidation. The big issue is freight. Most iron ore producers negotiate contract prices with steel mills based on the market's supply and demand outlook. CVRD is getting roughly USD $40 per ton more than the Australians.

"CVRD's advantage is basically geography. Shipping rates are less from Australia than from its home country of Brazil, due to the former's proximity to China. Historically the difference has been around USD $5 per ton, something the Australians could accept, particularly because CVRD's iron is of premium quality.

"Now, given the structural shift in shipping costs, the numbers are becoming too big to be ignored. Rio Tinto and BHP leave an estimated US $3 billion of pre-tax profit per year on the table. That's in part because of the value they place on their long-term customer relationships. But it's also because they haven't had a unified front on the issue, something that would of course change with a merger.

"Given the tight market situation, the pair could sell a bigger part of their production in the spot market, essentially forcing the steel mills to pay higher prices. The result is again higher iron ore prices. That will benefit all producers, including CVRD. And it will also boost the company's takeover appeal - making this a double play."

Each day, Steven Halpern's TheStockAdvisors.com website features the latest investment commentary and favorite stock picks of the nation's leading financial newsletter advisors.

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Freeport-McMoRan (FCX) higher on rate cut hopes

Brent Archer — 2007-11-28T11:38:00+00:00

Filed under: Good news, Options, Technical Analysis, Economic data, Freep't McMoRan Copper (FCX)

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) shares are gaining today even though gold is down this morning and copper is relatively flat. This is because a potential rate cut in December could spur growth, which would increase demand in the coming months for copper in buildings and telephone lines, among other things. If you think that the company won't fall by too much in the coming months, then now could be a good time to look at a bullish hedged trade on FCX.

After hitting a one-year high of $120.20 in October, the stock has declined steadily over the past month. FCX opened this morning at $91.19. So far today the stock has hit a low of $90.39 and a high of $92.11. As of 11:10, FCX is trading at $90.90, up $1.20 (1.8%). The chart for FCX looks neutral and deteriorating, while S&P gives the stock a negative 2 STARS (out of 5) sell rating.

For a bullish hedged play on this stock, I would consider a January bull-put credit spread below the $60 range. A bull-put credit spread is an options position that combines the purchase and sale of put options to hedge risk in case the stock doesn't do what you think but still leverage nice returns. For this particular trade, we will make a 5.0% return in just two months as long as FCX is above $60 at January expiration. Freeport-McMoRan would have to fall by more than 33% before we would start to lose money. Learn more about this type of trade here.

FCX hasn't been below $60 since March and has shown support around $85 recently. This trade could be risky if economic conditions continue to worsen, but even if that happens, this stock could be protected by strong support FCX found around $70 in August. Plus, the stock could find support at its 200 day moving average, which is currently at $84 and rising.

Brent Archer is an options analyst and writer at Investors Observer. DISCLOSURE: Mr. Archer owns and/or controls diversified portfolios of long and short stock and option positions that may include holdings in companies he writes about. At publication time, Brent neither owns nor controls positions in FCX.

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Freeport: Global reach, now at a bargain price

Joseph Lazzaro — 2007-11-19T18:08:00+00:00

Filed under: India, China, Brazil, Mexico, Freep't McMoRan Copper (FCX), Commodities, Stocks to Buy

The market's choppy/consolidating (or perhaps worse) period continues. No single market participant can change that reality, but you can make the best of it -- specifically by looking for bargains.

Miner Freeport-McMoRan (NYSE: FCX) is one such opportunity. Freeport is the world's second-largest copper producer and a major miner of gold and molybdenum. Further, FCX's purchase of Phelps Dodge in March 2007 means that the company now has proven and probable reserves of: copper, 75 billion pounds; gold, 128 million ounces; and molybdenum, 1.9 billion pounds, net minority interests.

But perhaps most important, Freeport is one of only eight companies that have the economies of scale to compete in the global mining sector of the early 21st century. Look for continued merger/acquisition talk in the sector, but don't think of Freeport as an acquisition play: FCX has a large portion of the global copper market, geographical diversification, and enduring relationships with key customers, among other strengths, to continue to perform well in the years ahead.

The qualifiers? True, the copper segment would be hurt be continued sluggish in the U.S. housing sector, but emerging market demand is likely to remain solid, even assuming a slowdown in China's economy. (And so far, China's government has not been effective in slowing its economic growth.) Meanwhile, demand for gold is expected to remain adequate in the years ahead. The Reuters F2007/F2008 EPS consensus estimates for FCX are $9.68/$10.53.

Not surprisingly, investors bid-up Freeport's shares to a pricey $120 earlier this year, but a correction ensued, with FCX currently trading in the $91-$93 range. That translates to a p/e of 11, which is reasonable given FCX's advantageous market position and prospects for growth. Don't expect Freeport's ascent to be perfect and calm, given its dependence on commodity prices, but that does not blot-out the secular trends that point to good things for FCX's in the years ahead.

The First Call mean rating for FCX is: Buy. (19 firms.) Mean 2007 target: $120.40. (high: $157, low: $52.40.)

Stock Analysis: Freeport is a moderate-risk stock not suitable for low-risk investors. Investors should expect above-average volatility with FCX. Don't buy FCX if your portfolio already contains a mining/mineral component. Investors with an investment horizon longer than 2 years should be rewarded from FCX's shares. Sell / Stop Loss if you were to buy shares in this company: $64.

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