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Aug 22, 2023

Top Copper Stocks for Q3 2023

Southern Copper leads for best value, while Capstone Copper is top for growth and momentum RiverRockPhotos / Getty Images Top copper stocks for the third quarter include Capstone Copper Corp., Ero

Southern Copper leads for best value, while Capstone Copper is top for growth and momentum

RiverRockPhotos / Getty Images

Top copper stocks for the third quarter include Capstone Copper Corp., Ero Copper Corp., and Ivanhoe Electric Inc., whose shares have returned as much as 153% in the last year.

Copper stocks as a group, represented by the benchmark Global X Copper Miners ETF (COPX), rose 38% in the last year, compared with the Russell 1000 Index's 14% improvement. Copper prices swung dramatically in 2022, jumping to a record high after Russia's invasion of Ukraine in February before plummeting by July. They have since risen on a short-term supply shortage and investment in green energy technologies.

Here are the top copper stocks in each of three categories: best value, fastest growth, and best performance. These are stocks of companies that mine for copper, rather than futures that track the copper commodity. All data is as of July 21.

These are the copper stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.

Source: YCharts

These are the top copper stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-on-year (YOY) percentage revenue growth and their most recent quarterly YOY earnings-per-share (EPS) growth.

Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 1,000% were excluded as outliers.

Source: YCharts

Momentum investing is a factor-based investing strategy that involves buying a stock whose price has risen faster than the market as a whole. Momentum investors believe that stocks that have outperformed the market will often continue to do so because the factors that caused them to outperform won't suddenly disappear. In addition, other investors seeking to benefit from the stock’s outperformance will often purchase it, further bidding up its price.

These are the stocks that had the highest total return over the past 12 months.

Source: YCharts

Demand for copper likely will rise steadily, as it is a critical element in the energy transition because the metal is used in electric vehicles, charging stations, wind turbines, and solar panels. The price of copper is largely influenced by the health of the global economy. This is due to copper's widespread applications in all sectors of the economy, as mentioned, and also in construction, factory equipment, and electronics. Still, as electric vehicle technology improves, the need for copper in these products—and, consequently, the overall demand for the metal—may be reduced.

The base metal's price is seen as a reliable leading indicator. A rising market price suggests strong economic health, while a decline suggests the opposite.

Some risk factors to be aware of when considering investing in copper stocks are commodities prices' overall tendency to be much more volatile than traditional stock prices and the environmental risks posed by copper mining.

Growing focus on sustainability may force copper miners to use more expensive methods to extract the metal and could add to the world supply shortage. In 2020, for instance, Anglo-Australian copper miner Rio Tinto PLC (RIO) took a hit from environmental, social, and corporate governance (ESG) investors when it destroyed a site sacred to Indigenous people in Australia. The CEO and two other executives resigned over the incident.

The comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read our warranty and liability disclaimer for more info.

As of the date this article was written, the author does not own any of the above stocks.

YCharts. "Financial Data."

International Energy Agency. "The Role of Critical Minerals in Clean Energy Transitions."

First Quantum Minerals. "Q1 2023 Financial and Operating Results," Page 30.

Capstone Copper. "Capstone Mining and Mantos Copper Complete Combination to Create Capstone Copper."

Capstone Copper Corp. "Capstone Copper Reports First-Quarter 2023 Results."

Taseko Mines Ltd. "TASEKO REPORTS $36 MILLION OF ADJUSTED EBITDA FOR FIRST-QUARTER 2023."

Seeking Alpha. "Ero Copper: Strong Prospects But Shares May Become Cheaper." (Subscription required.)

OilPrice.com. "New EV Innovations Put A Dent In Copper Demand."

CNN. "Rio Tinto CEO Resigns After Destruction of 46,000-Year-Old Sacred Indigenous Site."