Freeport-McMoRan: Sudden Cash Flow King

In a matter of months, Freeport-McMoRan (FCX) went from a company with a questionable financial future to one generating substantial free cash flow. The copper miner cut the dividend prematurely in a sign of the unprecedented fear back in March and the next move is to reinstate a capital return plan. My investment thesis remains highly bullish on the stock despite trading up at $18 now.

The biggest fear back in March was an economic shutdown in China. The largest copper user in the world has already snapped back into growth mode leading to the substantial rally in copper prices.

The stock fell to a low of $5 back in March when the company suspended the already meager $0.05 quarterly dividend. Q1/Q2 revenues were horrible as the price of copper collapsed causing Freeport-McMoRan to report sizable revenue declines.