being invested in SouthernCopper (PCU), i can’t help but notice the precipitous climb back to the triple digits. i figured some of it was to get in on the div, which for this quarter was dropped to $1.40 per share, but the x-date is long gone. i also thought it may have to do with the repurchase plan recently authorized.
the repurchase plan is probably a factor but the rising price of copper is obviously a better indicator of future performance, especially for a company that manages the entire cycle (extraction, transport, etc). the company has a great track-record of paying out dividends (at least great in my book), and the proletarians seem relatively at peace (i.e. no strikes), so the earnings should pick up again and the dividends right along with it. they have a new mining site opening up by end of 2010 but that won’t impact the bottom line for some time. it is worth paying forward a bit more since that is a strong indication that they’ll be growing but the rise and continued growing demand for copper is at least at the time of writing this a better reason for buying PCU on softness and just holding.
there’s more earnings related information in the southern copper 8k. i also highly recomend readers to check out david tsao’s recent post on southern copper. he points out a number of strong points as well as gives time to potential drawbacks.
all that aside, what do we make of copper demand and the world economy? are we able to remain confident in the greater health of the global economy and will that help the US recover?
i’m also a bit curious how you think castro retiring will affect the world and US policies? think we’ll see some young upstart who’s tied to chavez rise from the back-ground? (democracy now has a good segment dedicated to this topic. here’s the link; thanks democracynow!)
2 responses so far ↓
1 David Tsao // Feb 21, 2008 at 2:45 pm
The global economy in relation to US economy is hard to predict. You need to be really careful what investments you pick in this environment. PCU has good fundamentals going for it, even if global economic softness plays out this year and into next.
2 messels // Feb 22, 2008 at 9:34 am
hey david, glad to have you in the conversation!
i know you’re thinking there’s an affect of the olympics in china driving growth on the mainland, at least a small bit, but globally the demand for copper doesn’t seem to be dropping much.
the real risk–and it’s probably going to happen–is that supplies will catch up with demand and the price of copper will drop. i mean, there are supply shortfalls now but that won’t last long. this should drop the price of commodity miners like PCU which i think has had a really strong run up due in part to the increase in copper prices over the last month and a half.
i actually bought more PCU today since it’s a few bucks off the recent high. i plan to get another lot if it goes to 105 or so.
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