Not counting dividends, shares of Freeport-McMoRan (FCX 1.33%) are up about 1% year to date. That's pretty poor performance considering that the S&P 500 is up more than 25% over the same period. Does this relative underperformance in 2013 suggest there's untapped upside in the year ahead?

A look back
Freeport-McMoRan made a massive bet on oil and gas in 2013 as it completed the acquisitions of McMoRan Exploration and Plains Exploration & Production. Those two deals shifted Freeport-McMoRan's business from one very focused on copper and gold production to a much more diversified resource company. Going forward, the oil and gas business will contribute more than a quarter of the company's EBITDA. 

That move actually proved to be well timed, as Freeport-McMoRan's copper and gold operations were hit by plunging prices and a major incident at its Grasberg mine. Those two factors really held the company back in 2013. However, Freeport's stock didn't suffer as much as its pure-play gold mining peers -- Goldcorp (GG), for example, was down more than 45% on the year. Goldcorp and other gold stocks were faced with a record plunge in gold prices this year, while Freeport's diversification helped insulate it from some of that drop. 

Focusing on organic growth
Freeport-McMoRan has visible organic growth in both its mining and oil and gas segments. It sees annual copper production growing by 37% as early as 2015 due to advances with several projects. Meanwhile, production in its oil and gas business is expected to double over the next five years. This balanced approach to growth should continue to provide steadier returns for Freeport's investors. 

In copper, Freeport-McMoRan estimates that production will rise from 4.1 billion pounds in 2013 to 4.4 billion pounds next year. The company has three major brownfield copper expansion developments that will come online over the course of the next couple of years. These three projects are expected to deliver about 1 billion pounds of copper production growth by 2016. That's why investors can expect 2014 to be a year of continued investment in copper, meaning it will be important to monitor the progress of these three major projects.

Freeport-McMoRan's gold production will see a big year-over-year boost in 2014; the company expects to produce 1.7 million ounces, up from 1.1 million in 2013. Additional gold volumes from its massive Grasberg mine in Indonesia are driving next year's production growth. Output at Grasberg is expected to nearly double in 2016 from its current rate. Again, investors should monitor the development of this mine. Last year's deadly collapse forced its temporarily closure, and another incident could really impact the mine's long-term production. 

Finally, oil and gas production is projected to head higher as the company's Lucius development starts producing in the second half of the year. Lucius, of which Freeport-McMoRan owns a 23.3% interest, is a co-venture between Anadarko (NYSE: APC) and others. The Anadarko-led project is expected to produce 80,000 barrels of oil per day and 450 Mmcf of natural gas per day. It is estimated that the partners will eventually recover more than 300 million barrels of oil equivalent from the project.

Investor takeaway
Freeport-McMoRan is in a much better position to start 2014. It's already digested its large oil and gas acquisitions and can now focus on growing. The company has good upside to gold prices in the year ahead, and as the world's No. 2 copper producer it's very well positioned as copper prices recover as well. Unless commodity prices really plunge in 2014, investors should expect a much better performance from Freeport-McMoRan's stock in the coming year.

The best stock to own in 2014