Natural Resources Are On Sale [Freeport-McMoRan Copper & Gold Inc, Noble Energy, Inc.]

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February 4, 2014 12:39pm NASDAQ:CU NYSE:FCG

metals and mining: Several years ago when no one could talk about anything but metals – gold and miners in particular – and their prices were through the roof, I made a wish list of miners and set what I thought at that time was a

ridiculous target buy price of 50% off.

Well, as will always happen in the stock market if you wait long enough, my price alarm went off last week for one of my favorites, Freeport-McMoRan Copper & Gold Inc.(NYSE:FCX).

As with all miners, FCX has been slammed by worldwide slowing demand for metals, and is down from highs of around $65 a share to $32 and change. But when copper finally stabilizes and demand improves – which it has to do – FCX will break out way above its current price.

This is a company that is the dominant player in copper worldwide and has been doing everything right during the downturn in both the gold and copper markets.

FCX has begun to diversify away from copper, which has been the source of two-thirds of its revenues. Twenty-four percent of revenues now come from energy, and there are plans to continue to reduce its dependence on one product.

The company has also shifted its focus to more activity in the United States and away from less stable markets like Indonesia. By the way, Indonesia has been a major thorn in its side.

Fifty-one percent of revenues are now from North American operations.

There is a three-year debt reduction plan in place, and the company is maintaining its $1.25 (3.8%) dividend and increasing production while reducing production costs.

Revenues last quarter were up 30.4% year-over-year and up 13% overall for 2013.

In what has been a horrible market FCX has made all the right moves. You need to look at FCX.

A Cheap Buy in Energy

Noble Energy, Inc. (NYSE:NBL) is shaping up as one of the best and cheapest energy plays in the sector.

The stock is down 19.2% from its 2013 high, and that is despite estimates of a 20% increase in earnings and an 18% increase in revenues this year, a 40% increase in revenues last quarter and a five-year growth estimate of 12.3%.

But most encouraging is Noble’s first long-term deal for gas from its Leviathan well to nearby Middle Eastern countries. Its eastern Mediterranean operation was described in a recent Barron’s article as phenomenal.

That combined with its sizable portfolio of onshore U.S. assets in Colorado and the Marcellus Shale in Pennsylvania will support a strong production base. These will account for 70% of its 2014 capital budget.

Noble also has exploration possibilities in the Gulf of Mexico and Equatorial New Guinea, and will be the leader among its peers in production for several years. These factors will drive the stock price.

In a recent Barron’s article, Noble was cited as the exception in its industry for what most expect to be a weak year for oil. The reasons cited were its resource expansion and improved operations.

Noble: A big cap independent you should take a look at.

by Steve McDonald, Bond Strategist, The Oxford Club

Investment U provides cutting-edge research and strategic financial recommendations for all levels of investors through its morning publication Investment U Daily and its related publications.

Complete List Of ETFs That Hold “Freeport-McMoran Copper & Gold (FCX)

Freeport-McMoRan Copper & Gold Inc. is an international natural resources company with headquarters in Phoenix Arizona. The Company operates large long-lived geographically diverse assets with significant reserves of copper gold molybdenum cobalt oil and gas.

Complete List Of ETFs That Hold Noble Energy Inc. (NBL)

Noble Energy Inc. is an independent energy exploration and production company. The Company explores for and produces crude oil natural gas and natural gas liquids. Noble Energy operates primarily in the Rocky Mountains Mid-continent and deepwater Gulf of Mexico areas in the US with key international operations offshore Israel the North Sea and West Africa.

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