We recently compiled a list of the 8 Best Copper Stocks To Buy According to Hedge Funds.In this article, we are going to take a look at where Barrick Gold Corporation (NYSE:GOLD) stands against the other copper stocks.
Copper is recognized as a critical metal due to its extensive applications, particularly in electrical wiring and renewable energy infrastructure. Prices of copper reached a record high during the first half of 2024, selling at $5.11 per pound on May 21, 2024. However, the price dropped slightly during the third quarter but remained elevated to its historic rates from the past two years.
At the start of Q3, copper was priced at $4.42 per pound. It peaked at $4.65 on July 5 but then declined to a low of $3.95 by August 7. The third quarter ended with prices recovering to $4.50 on September 30.
There are several factors affecting the prices of copper. Firstly, the demand for this metal remains high, largely driven by sectors related to the energy transition, including renewable energy and electric vehicles (EVs). However, this demand coincides with a slowdown in the Chinese real estate sector, which is traditionally a major consumer of refined copper. Regardless of the challenges in the real estate market in China, the global demand for copper saw a slight increase of 2.5% in the first half of 2024. The growth was driven by notable demand from China of around 2.7% while other regions also witnessed demand growth of around 2%.
However, despite high consumption, the supply side outpaced the demand. According to a report by the International Copper Study Group (ICSG), there was a surplus of 535,000 metric tons (MT) through the first eight months of 2024. The global copper mine production remained elevated, increasing by 2% to reach 14.86 million MT from January to August 2024. Chile’s Escondida and Collahuasi mines remained key contributors while operations in the Democratic Republic of Congo and Indonesia reported 11% and 22% production growth, respectively. In addition to raw copper refined metal production also witnessed a 5% increase driven by expansion in China and the launching of new facilities in the Democratic Republic of Congo.
According to a report by Investing News Network, analysts believe that the primary reason behind higher prices during the first half of 2024 was not the fundamental supply-demand play, but was led by speculative investment. Analysts back this sentiment on the assumption that market participants would have taken a cautious approach following substantial gains in Q2 resulting in fluctuating prices of copper.
Looking ahead, the ongoing struggles in China’s real estate sector have dampened overall demand for copper. The government’s efforts to stimulate the market through various initiatives to boost housing projects are expected to revive global demand further. Moreover, energy transition efforts also continue to fuel demand for copper, the International Energy Forum estimates that approximately 1.1 new mines will need to come online annually until 2050 just to maintain current demand levels.
Our Methodology
To compile the list of the 8 best copper stocks to buy according to hedge funds, we used the Finviz stock screener and our previous articles. Using the two sources we curated an aggregated list of copper stocks sorted by market capitalization. Next, we ranked these companies based on the number of hedge fund holders as of Q3 2024, sourced from Insider Monkey’s database. The list is ranked in ascending order of the number of hedge funds.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
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A miner examining yellow gold ore in a mine shaft, symbolizing the company’s exploration process.
Number of Hedge Fund Holders: 42
Barrick Gold Corporation (NYSE:GOLD) is a major mining company based in Canada that primarily focuses on producing gold and copper. The company operates in 13 countries including copper mines in Chile, Saudi Arabia, and Zambia. In 2023, it produced approximately 4.05 million ounces of gold and 420 million pounds of copper.
The company has faced challenges in 2024 but continues to show progress, particularly concerning its copper operations. During the fiscal third quarter of 2024, Barrick Gold Corporation (NYSE:GOLD) reported a 12% increase in copper production compared to the previous quarter. Management attributed the growth to improved operational efficiencies and cost reductions across its copper mines, particularly at Lumwana in Zambia. Management expects that its cost of producing copper will further decrease as production ramps up throughout the year.
To ramp up its copper production, Barrick Gold Corporation’s (NYSE:GOLD) feasibility studies for Lumwana and Reko Diq are expected to be completed by the end of the year. Lumwana mine is one of the most significant copper assets for the company. Whereas, it is also developing the Reko Diq project in Pakistan, which is one of the largest undeveloped copper-gold projects globally. The project aims to produce high-quality copper and gold concentrate. The expected lifespan of the project is at least 40 years. Management has planned construction in two phases, with initial production targeted for 2028. Considering the current progress and prospects of the company, it ranks as one of the best copper stocks to buy according to hedge funds.
“Lastly, gold mining company, Barrick Gold Corporation (NYSE:GOLD) fell in the period. Although GOLD delivered in-line earnings results, as higher prices offset lower gold and copper volumes as well as increased costs, investors were disappointed with management’s outlook for full year 2024. GOLD guided to flat production year-over-year driven by lower-than-expected output due to a delayed permit at the Nevada Gold Mines and mechanical issues at Pueblo Viejo. Management remains laser focused on upgrading its mining operations and broadly improving efficiencies amid today’s rising prices for precious metals. The company also continues to prioritize capital returns to shareholders via dividends and a recently announced share repurchase program.”
Overall GOLD ranks 3rd on our list of the best copper stocks to buy according to hedge funds. While we acknowledge the potential of GOLD as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than GOLD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
