Why Freeport's Fallen So Far This Year

As we approach the halfway point for 2012, now's a good time to look back at what's happening with the stocks that interest you. By making sure you know the important things that a company accomplished -- as well as the setbacks it experienced -- you can make a better decision about whether it's a smart investment for your portfolio.

Today, let's take a look at Freeport-McMoRan Copper & Gold (NYSE: FCX  ) . As a major mining company, Freeport has benefited from the huge demand for copper in infrastructure development in China and elsewhere, as well as from spiking gold prices. But so far this year, those trends have reversed and sent many materials stocks tumbling. Let's take a quick look at how the stock is doing so far this year.

Stats on Freeport-McMoRan Copper & Gold

2012 YTD Return (12.8%)
Market Capitalization $30 billion
Revenue, Most Recent Quarter $4.6 billion
Year-Over-Year Revenue Growth, Most Recent Quarter (19.3%)
Net Income, Most Recent Quarter $764 million
Year-Over-Year Net Income Growth, Most Recent Quarter (49%)
CAPS Rating (out of 5) ****

Source: S&P Capital IQ.

Why has Freeport dug itself into a hole?
Unfortunately, all good things must come to an end, and for Freeport, the long spell of Chinese economic growth is taking at least a well-deserved pause. That has had a huge impact on Freeport's results lately, as the company sold 100 million fewer pounds of copper and 190,000 fewer ounces of gold in the first quarter of 2012 compared to the year-ago quarter.

Interestingly, the slowdown isn't industrywide, as Southern Copper (NYSE: SCCO  ) managed to grow year-over-year revenue and net profit in its most recent quarter. Rio Tinto (NYSE: RIO  ) , on the other hand, has seen a similar price decline despite its majority stake in Ivanhoe Mines (NYSE: IVN  ) and its potential $300 billion Mongolian mine project.

Long-term investors are salivating at the chance to buy Freeport shares on the cheap. As Fool Rising Star Jim Mueller recently pointed out, copper demand has risen gradually for the past century. That makes the current blip look like a buying opportunity, especially given Freeport's low-cost production at about $1 per pound of copper. With copper demand projected to exceed supply, Freeport will still have basic economics on its side.

Moreover, the company showed a vote of confidence by raising its dividend by 25% in February. The new payout of $0.3125 per share quarterly amounts to almost a 4% yield at current prices, which makes a nice kicker for a stock with growth potential.

Freeport-McMoRan Copper & Gold has plenty of potential, but we've got another miner that deserves your attention as well. Read The Motley Fool's latest special report on gold to discover the tiny gold stock digging up massive profits. It's free but only available for a limited time.

Click here to add Freeport-McMoRan Copper & Gold to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.


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