This company has been absolutely crushed over the past five years, and it may indeed be a compelling value at current levels. Freeport-McMoRan Inc. (NYSE: FCX) is a premier U.S.-based natural resources company with an industry-leading global portfolio of mineral assets, significant oil and gas resources and a growing production profile. It is also the world’s largest publicly traded copper producer.
The company’s portfolio of assets includes the Grasberg minerals district in Indonesia, one of the world’s largest copper and gold deposits. It has significant mining operations in the Americas, including the large-scale Morenci minerals district in North America and the Cerro Verde operation in South America. Other assets include the Tenke Fungurume minerals district in the DRC, as well as significant U.S. oil and natural gas assets, principally in the Deepwater Gulf of Mexico and in California.
The company recently postponed an oil and gas spin off, and the market responded very positively. The company also has continued to shed assets and build up a solid cash position.
The Jefferies team notes that there’s been considerable market chatter over a Rio Tinto possible acquisition of the company. While there are situations that would need to be resolved to complete such a transaction, they think it could be an outstanding fit. They note that such a deal would lessen Rio Tinto’s exposure to iron ore, and increase the company’s exposure to copper.
Jefferies has a $15 price target on the stock, and the consensus price objective is lower at $10.91. Note that shares closed higher than that on Friday at $11.11.
Simon Property Group
This is one of the largest real estate investment trusts (REITs) and it boasts an outstanding market position. Simon Property Group Inc. (NYSE: SPG) invests in the real estate markets across the globe. It engages in investment, ownership, management and development of properties, primarily regional malls, premium outlets, mills and community/lifestyle centers. Through its subsidiary partnerships, it owns or has an interest in about 230 properties in the United States and Asia. The company also has a 28.9% interest in Klepierre, a European REIT with over 260 shopping centers in 13 countries.
The company posted very solid first-quarter numbers and raised its outlook going forward. The first-quarter funds from operations exceeded the consensus earnings per share estimate. Growth in operating income and new developments and expansions aided the results. Total revenue in the quarter increased 9.9% year over year, trouncing the consensus estimate.
While many fear the move away from brick-and-mortar stores, the Jefferies team notes that A level malls, many of which Simon’s owns, are exhibiting no signs of a slowdown in demand for high-quality mall space. With a lack of new supply coming, they see things shaping up nicely for this sector leader.
Simon Property investors are paid a 3.21% distribution. The $250 Jefferies price target compares with the consensus target of $228.95 and the $199.49 share price when trading ended on Friday.
All three are compelling value stocks, with two being among the leaders in their respective sectors. These stocks make good sense for patient growth investors with a solid long-term time horizon.