“It is never too late to be what you might have been.”
By Matt Badiali, editor, S&A Resource Report Wednesday, January 9, 2013
The copper market has turned 180 degrees in under six months.
Back in the summer, I was concerned that massive stockpiles of copper on China’s wharves would hurt the copper price. Since China consumes around 40% of the world’s copper supply, it’s a huge factor in the market. But China’s manufacturers must have worked through the supply, because it just set a monthly import record in November. That’s hugely bullish news for copper producers… and their shareholders. Take a look at the chart below. In November, China imported more copper than ever before…
Since 2009, when the world economy slowed, China’s copper imports have been stuck between 450,000 and 700,000 metric tons per month. But by last November, imports nearly doubled from the bottom of their range. That confirms what I told you last month: China’s manufacturers’ purchasing index (a measure of growth or contraction in that sector of China’s economy) hit a 13-month high. And China’s exports are once again rising. That should take care of China’s copper surplus. So while September’s rally in the copper price was premature, the recent rise, supported by data from China, looks like the real thing.
Copper already hit a new short-term high at the beginning of the year. This is solid news for copper-producing companies…
The base-metal mining sector has struggled since 2011. Large miners like Freeport-McMoRan (NYSE: FCX) are down more than 30% from their 2011 highs. Given these losses and global economic worries, there’s plenty of pessimism toward the sector.
Despite improving data (including the rebounding iron ore numbers I showed you last week), investors are still terrified of a China slowdown. That’s why contrarian investors should look here to make money in 2013.
In my S&A Resource Report, we’ve already started…
Readers are up 35% on giant copper producer Southern Copper (NYSE: SCCO) over the last year.
We bought the trophy copper company because it has the world’s largest volume of copper reserves. Based on current reserves and production rates, it could operate for 144 years without ever looking for new material. My typical rule of thumb is to buy these companies at 10 times cash flow or lower. And the Bloomberg estimate for 2012 cash flow from operations is $3.4 billion. The company’s market value is $33 billion… so its valuation is right in the sweet spot at 9.7 times cash from operations. And the company returns a lot of that cash flow to shareholders. We collected $3.70 per share in dividends in just one year… almost a 12% yield. Resource investors should consider the copper sector in 2013. Global central banks are running the printing presses… which is keeping the economy afloat. If China’s demand for copper continues, we’ll see solid gains from cheap copper miners.
Good investing, Matt Badiali
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Walter Unger CCIM, CCSS, CCLS
I am a successful Commercial Investment Real Estate Broker in Arizona now for 15 years and I worked with banks and their commercial REO properties for 3 years. I am also a commercial Landspecialist in Phoenix and a Commercial Landspecialist in Arizona.
WHETHER YOU LEASE OR OWN
NOW IS THE TIME FOR YOU TO EXPAND, UPGRADE OR INVEST.
In my opinion we are at or near the bottom of the cycle in Commercial Real Estate in Phoenix and now is the time for you to expand, upgrade or invest in Commercial Properties in Phoenix. The prices on deals I may get you will not be around forever.
IF YOU OR ANYBODY YOU KNOW IS IN TROUBLE WITH YOUR BUSINESS, AS MANY AMERICANS ARE IN THE MOMENT, AND ARE ABOUT TO LOSE YOUR COMMERCIAL PROPERTY, PLEASE CONTACT ME. IF YOUR BANK IS BEHAVING BADLY I MAY BE ABLE TO HELP YOU GET OUT OF SOME OR MAYBE A LOT OF FUTURE HEADACHES.
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We barely could give land away the last few years, but times are changing. Even in those meager years, I sold more land across the state than most other brokers. Before the real estate crash I was a land specialist in Arizona with millions of dollars of transactions, but then I had to change and also sell other commercial investment properties, which was fun, but I am a Commercial Landspecialist in Arizonal, a Commercial Land Specialist in Phoenix and love to sell land, one acre to thousands of acres.
Since I was a Land Specialist in Arizona and a Land Speciaost in Phoenix many of my clients, Sellers and Buyers remember me and now they are calling me again, so this is the time to get back into land and none of my clients, including future clients, will miss out on getting their best deal.
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If you have any questions about the 1 to 3 above, about Commercial Investment Properties in Phoenix or Commercial Investment Properties in Arizona, I will gladly sit down with you and share my expertise and my professional opinion in Commercial Properties in Phoenix or Commercial Properties in Arizona with you.Obviously I am also in this to make money, but it could be a win-win situation for all of us.
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