UKRAINE – 2021/03/21: In this photo illustration the stock market information of Freeport-McMoRan … [+]
Freeport-McMoRan stock (NYSE: FCX) has doubled in the last six months (126 trading days) and currently trades close to $38 per share. The rally in the stock from $19 to $38 was driven by a sharp recovery in copper prices over recent months. Global copper prices jumped from $3.05/pound at the end of October 2020 to $4.50/pound at the end of April 2021, a 48% jump in six months. The current price of copper is 90% more than the level seen a year back. The gradual lifting of lockdowns, stimulus packages, and lower interest rates have led to expectations of faster economic recovery and higher demand from automobile and construction companies, thus leading to the copper rally. Additionally, as the Grasberg mine transition near an end, the significant copper and gold output from the Indonesian mine is set to drive healthy growth in shipments, revenue, and earnings for FCX in the coming quarters. Increasing adoption of electric vehicles will also keep copper prices elevated. But will FCX’s stock continue its upward trajectory over the coming weeks and months, or is a correction in the stock more likely?
According to the Trefis Machine Learning Engine, which identifies trends in a company’s stock price data for the last ten years, returns for FCX stock average close to 9% in the next one-month (63 trading days) period after experiencing a 100% rise over the previous six-month (126 trading days) period. Notably, though, the stock is likely to outperform the S&P500 over the next three months, with an expected return which would be 6.4% higher compared to the S&P 500.
But how would these numbers change if you are interested in holding FCX stock for a shorter or a longer time period? You can test the answer and many other combinations on the Trefis Machine Learning to test FCX stock chances of a rise after a fall and vice versa. You can test the chance of recovery over different time intervals of a quarter, month, or even just one day!
MACHINE LEARNING ENGINE – try it yourself:
IF FCX stock moved by -5% over five trading days, THEN over the next 21 trading days, FCX stock moves an average of 1.7 percent, which implies a return which is only 0.5% higher than that of the S&P 500.
More importantly, there is a 51% probability of a positive return over the next 21 trading days and 48% probability of a positive excess return after a -5% change over five trading days.
Some Fun Scenarios, FAQs & Making Sense of FCX Stock Movements:
Question 1: Is the average return for Freeport-McMoRan
Answer: Consider two situations,
Case 1: Freeport-McMoRan stock drops by -5% or more in a week
Case 2: Freeport-McMoRan stock rises by 5% or more in a week
Is the average return for Freeport-McMoRan stock higher over the subsequent month after Case 1 or Case 2?
FCX stock fares better after Case 2, with an average return of 1.7% over the next month (21 trading days) under Case 1 (where the stock has just suffered a 5% loss over the previous week), versus, an average return of 3.6% for Case 2.
In comparison, the S&P 500 has an average return of 3.1% over the next 21 trading days under Case 1, and an average return of just 0.5% for Case 2 as detailed in our dashboard that details the average return for the S&P 500 after a fall or rise.
Try the Trefis machine learning engine above to see for yourself how Freeport-McMoRan stock is likely to behave after any specific gain or loss over a period.
Question 2: Does patience pay?
Answer: If you buy and hold Freeport-McMoRan stock, the expectation is over time the near term fluctuations will cancel out, and the long-term positive trend will favor you – at least if the company is otherwise strong.
Overall, according to data and Trefis machine learning engine’s calculations, patience absolutely pays for most stocks!
For FCX stock, the returns over the next N days after a -5% change over the last five trading days is detailed in the table below, along with the returns for the S&P500:
FCS Average Return
Question 3: What about the average return after a rise if you wait for a while?
Answer: The average return after a rise is generally lower than after a fall as detailed in the previous question. Interestingly, though, if a stock has gained over the last few days, you would do better to avoid short-term bets for most stocks – although FCX stock appears to be an exception to this general observation.
It’s pretty powerful to test the trend for yourself for Freeport-McMoRan stock by changing the inputs in the charts above.
While FCX stock may have moved a lot, 2020 has created many pricing discontinuities which can offer attractive trading opportunities. For example, you’ll be surprised how the stock valuation for Compass Minerals vs Southwest Gas
See all Trefis Price Estimates and Download Trefis Data here
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