OK, Fools, what should we do with this one? Amid a market with more ups and downs than a yo-yo, Freeport-McMoRan's (NYSE: FCX) share price has run up about 29% since late March. Looking ahead to a company's approaching earnings report, is it time to buy, sell, or waffle?

To figure that out, let's first look at copper prices. Since Freeport is the world's largest publicly owned producer of this vital metal, it's important to note that spot prices are in the vicinity of $4 a pound. That compares to less than $3 late last year, and to below $1 as recently as five years ago. And you thought only oil prices had gone through the roof!

Juxtapose that trend against two key facts:

  • Freeport has long-lived, geographically diversified reserves of copper, gold, and molybdenum in places like Arizona, Peru, Chile, Indonesia, and the Democratic Republic of Congo.
  • China alone accounts for about 20% of the world's copper demand.

Next, let's think about a couple of key metrics for the company. For instance, analysts think the company will earn about $10.22 a share this year, and $11.17 in 2009. It's therefore trading at about a 10.4 times forward P/E based on the 2008 expectations and just a 9.5 times figure for next year. That, despite its recent run-up, remains well below the market averages.

Finally, given the recent history of the metals and mining sector, it's not inconceivable that Freeport could become a gleam in the eye of another big metals operator. The company itself picked off Phelps Dodge, a copper producer twice its size, last year and, with the rampant consolidation going on in the industry, I wouldn't bet against the likes of BHP Billiton (NYSE: BHP), Rio Tinto (NYSE: RTP), or Brazil's Vale (NYSE: RIO) taking a shine to it.

So, while I'm fond of noting that few stocks move linearly for more than a short time, it appears that there could be life left in Freeport's surge.

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Fool contributor David Lee Smith is intrigued by the increasing importance of what's becoming a de facto metals cartel. He doesn't, however, own shares in any of the companies mentioned, but he does welcome your comments. The Fool has a disclosure policy.