Cheery Consensus? Not Here... Buy More.

This article is part of the Real-Money Stock Picks series.

One of my favorite quotes from Warren Buffett is, paraphrased, that uncertainty leads to better buying opportunities. Okay, I'm mashing it up. The original was, "You pay a high price for a cheery consensus." I believe this pertains to an opportunity today.

With copper and gold prices both lower in 2013 compared to 2012, Messed-Up Expectations portfolio holding Freeport-McMoRan Copper & Gold (NYSE: FCX  ) netted less money on higher volume sales for last year. Further, there was a sharp drop in copper prices this month from about $3.22 per pound down to as low as $2.91 per pound. Add in the dispute the company is having with the Indonesian government about exporting copper concentrate and you might think now would be a terrible time to add to the portfolio's position.

I disagree.

Sales and prices of commodities like copper are highly dependent upon the economy and, as we all know, the domestic and world economy have been in a pretty big funk as of late. Not a recession, but not growing robustly at all. In 2013, fiscal drag through both the sequester and higher taxes weighed heavily, reduced U.S. GDP by 1.3 percentage points last year by some estimates, leading the economy to grow at a disappointing 1.9% annual pace. Thanks to the budget deal  hammered out last December, however, a lot of that drag has been removed over the next couple of years. That should mean the U.S. economy should grow more robustly over the next couple of years, which should improve demand for copper in the U.S.

Shoulda, coulda, will
I know that's a lot of "shoulds," but Freeport McMoRan's management agrees. In the last quarterly conference call, CEO Richard Adkerson said, "In the U.S., demand has steadily improved... We're seeing improvement in non-residential construction and the automobile industry continues to be very strong and an important consumer of copper. As we talk to our downstream customers, we're hearing positive comments about their performance in 2013 and a degree of confidence about 2014."

He mentioned that they're seeing beginnings of recovery in Europe, and China is still spending a lot of money on infrastructure (including a recent announcement by State Grid to increase its spending), which means improving demand internationally.

Competitor BHP Billiton (NYSE: BHP  ) -- a broadly diversified commodities company -- made similar statements. In its recent quarterly release, it wrote, "Growth in copper production has exerted some downward pricing pressure, with the supply of concentrate exceeding smelter capacity. Improving global economic conditions are, however, set to support demand growth and we expect the copper market to move back into deficit in the medium term."

Still working the thesis
When I originally purchased shares for this portfolio, part of the thesis was the rising long-term trend for copper demand. We've had a period of flatness thanks to very slow economic growth over the past couple of years. But the tide finally seems to be turning. I'll be adding some more shares to the portfolio's position as soon as Fool trading rules allow.

Please come visit the portfolio's discussion board and share your thoughts.

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