Near Term Buying Opportunity for Phelps Dodge? (PD)

Jan.23.06 | About: Phelps Dodge (PD)

Submitted by an anonymous reader who is long the stock: Phelps Dodge (PD), the world’s second largest copper mining company, has been up 50% since the late summer. The stock trades at a P/E of around 8-10, which looks quite good during this boom time for commodities. Given the three catalysts below, their stock should be trading higher in the near term:

  • Catalyst 1: PD has pulled back of late--almost 8%--related to a strike in Chile, which resulted in the company not being able to meet production estimates.
  • Catalyst 2: Increasing Chinese demand and a buying frenzy due to the rogue trader in Shanghai; this position needs to be filled by Feburuary.
  • Catalyst 3: Phelps Dodge is flush with cash; it is about to return $1 billion to investors in the form of stock buybacks and special dividends (it recently paid out a special $5 per share dividend).
  • PD 1-yr Chart

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