Southern Copper Will Zoom Following the Strike Pact

Southern Copper (PCU) reaching a pact with Peru union leaders, a significant uncertainty has been removed. As is often the case, the uncertainty burdening a stock is worse than the issue itself.

Amazingly, given the strike talk for months now, PCU has been steadily breaking new highs (which isn't that much of a surprise given the rise in copper prices, but one would think the potential strike looming would temper the share price level). Regardless, this could provide for some additional momentum in the stock now that this issue is at least temporarily resolved.

Why PCU

Aside from some possibly short-term improvements in fundamentals, it yields over 5% and provides for some international exposure (it benefits from the weak dollar each earnings report). Commodities are nice weakly-correlated instruments with the market, acting as inflation hedges to boot. PCU is up 140% year to date. BHP Billiton BHP is up 105% and Aluminum Corp of China ACH is up 225% are also great eligible international commodity plays.

Disclosure: I've held PCU in my self-directed IRA for some time now, given its high yield and steady performance.

Comments

[User 122865]

dah! where were you with this call 2 or 3 years ago. F-