Copper prices have hit $10,000/ton this week. Will McDonough, chief executive of merchant bank Corestone Capital, said he had “never seen such a high level of interest and conversation about copper.” “Copper prices are going through some serious spikes and prices are likely to be even higher in the future. I think this is the biggest investment opportunity right now, and a big contributor to demand is the transition to carbon neutrality and net zero targets,” he told me. CNBC Pro, April 25. “Any population growth or industrial growth leads to an increase in the demand for copper. So, whichever way it goes, the world is pretty much going to need copper. So having copper in your portfolio as a long-term asset is a no-brainer to me,” McDonald said. He recommends investors invest about 5%-10% of their portfolios in “stores of value,” which include copper and other commodities such as gold, silver, platinum and lithium. ‘A great company’ MacDonald’s favorite copper mining stocks include New York Stock Exchange-listed Sociedad Quimica y Minera de Chile SA (SQM). The Chilean chemicals company is “a large producer of lithium and copper. As the whole battery and electrification movement develops, there will be such a demand for lithium and copper that the company can benefit from that,” the investment manager said. Although SQM’s shares have fallen 31.2% in the past 12 months, McDonough remains optimistic about SQM. “It’s a great company and we track it very closely,” he said. According to FactSet data, 12 analysts have given SQM a buy or overweight rating, four analysts have given it a hold rating, and one analyst has given it an underweight rating. Analysts’ average price target for the stock is $64.07, representing a potential upside of approximately 34.9%. “Highly diversified company” Another stock that McDonough is watching is Australian mining company BHP Billiton because the company is not only involved in copper mining, but also in gold and iron ore. “This is a very diverse company, so it’s hard to beat them,” he said. BHP shares have fallen 3% in the past 12 months. Of the 21 analysts covering the stock, seven have a buy or overweight rating, 13 have a hold rating and one has an underweight rating, according to FactSet data. The average price target is AUD 46.14 (USD 30.36), representing a potential upside of 6.4%. Copper Futures In addition to stocks, McDonald recommends purchasing copper futures as a great way to take advantage of copper market opportunities and growing demand for the metal. “I think copper is undervalued. So it’s very interesting to get exposure to the precious metal through copper futures,” he said.
