We recently published a list of 7 Best Natural Resources Stocks to Invest in According to Hedge Funds. In this article, we are going to take a look at where Freeport-McMoRan Inc. (NYSE:FCX) stands against other best natural resources stocks to invest in according to hedge funds.

Natural resource stocks are an important part of the global economy, representing mining, energy, and agricultural companies. These industries are the foundation of numerous sectors, providing necessary materials for infrastructure, technology, and transportation. Despite the growing emphasis on renewable energy, fossil fuels, metals, and agricultural resources remain essential for modern economies. According to The Business Research Company, the global mineral market is expected to grow at a compound annual growth rate (CAGR) of 6.2%. This growth emphasizes the long-term importance of natural resources.

The top 40 global mining companies generated a record $943 billion in revenue in 2022, but this figure declined to approximately $792 billion in 2024, owing primarily to fluctuating commodity prices. Despite this, Deloitte reported that between January and mid-November 2024, the oil and gas industry paid out $213 billion in dividends and $136 billion in buybacks, demonstrating the sector’s strong cash returns.

However, the natural resource sector has been experiencing a surge in market activity, driven mainly by commodity price movements and global demand. Precious metals, in particular, have proven to be strong assets. Over the past year, the market’s Gold Index returned 44.59%, while the Silver Index returned 42.01%. These gains have resulted from rising investor interest in safe-haven assets due to inflationary pressures and escalating global trade tensions. As inflation erodes the value of fiat currencies, investors are increasingly turning to gold and silver as safe-haven assets during times of uncertainty.

Moreover, technological advancements such as Floating Liquefied Natural Gas (FLNG) platforms are increasing the efficiency of offshore gas production while reducing reliance on onshore infrastructure. According to Business Wire, global liquefied natural gas (LNG) liquefaction capacity is expected to double by 2028 from 473 million tons per annum (MTPA) in 2023 to 968 MTPA as expansion projects continue. This projected increase indicates that even as the world strives for cleaner energy sources, natural gas will continue to play an important role in the global energy mix.

While efforts to reduce global carbon emissions continue, natural resource companies are adjusting by balancing traditional operations with sustainability initiatives. For example, the UAE has pledged $30 billion to a global finance fund while its banking sector aims to invest $270 billion in green finance by 2030 to support renewable energy growth. Simultaneously, Middle Eastern sovereign wealth funds, which manage $3.8 trillion in assets, are increasingly allocating capital to green investments. This shift has not only reduced fiscal breakeven burdens for energy companies but has also increased regional economic stability.

The chemicals industry is also shifting to sustainability, with renewable production of key chemicals such as ammonia, methanol, and olefins expected to cost between $440 billion and $1 trillion by 2040. According to PwC, this figure could rise to between $1.5 trillion and $3.3 trillion by 2050.

Similarly, innovative zinc recycling techniques have produced a 95% recovery rate from steel mill waste, converting industrial waste into useful recyclable components. Nanotechnology breakthroughs are increasing recovery efficiency in gold mining while reducing environmental impact. These technological advancements demonstrate the growing significance of technology in maximizing resource use and cutting waste, which propels the natural resource industry forward.

Methodology

To compile our list of the 7 Best Natural Resources Stocks to Invest in According to Hedge Funds, we first conducted extensive research to identify companies with significant exposure to the natural resource sector. We defined exposure in terms of mining, energy production, agriculture, or the extraction and processing of key commodities. We then analyzed these companies based on their hedge fund holdings and ranked them based on the number of hedge fund investors who held stakes in these companies, as per the Q4 2024 data from Insider Monkey’s database.

Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).

Is Freeport-McMoRan Inc. (FCX) the Best Natural Resources Stock to Invest in According to Hedge Funds?

A large open-pit copper mine with heavy machinery extracting minerals from the earth.

Freeport-McMoRan Inc. (NYSE:FCX)

Number of Hedge Fund Holders: 88

Freeport-McMoRan Inc. (NYSE:FCX) is a prominent global mining corporation. It deals in the discovery and extraction of essential metals like copper, gold, and molybdenum, along with other vital minerals. Operating some of the most important mining assets in the world, such as Grasberg, Morenci, Cerro Verde, and El Abra, Freeport has a diverse portfolio that spans North America, South America, and Indonesia. The company’s vast resource base makes it an important supplier of metals for clean energy, infrastructure development, and various industrial uses.

Freeport-McMoRan’s EBITDA increased by a significant 14% in 2024, reaching $10 billion. This was driven by strong copper prices, which averaged $4.21 per pound, along with steady gold and molybdenum production. The business’s operating cash flows increased by 35% to over $7 billion, providing sufficient capital for strategic expansion projects. One notable accomplishment was the leach initiative, which greatly improved the company’s financial performance by delivering a 50% increase in incremental copper production over 2023. Nevertheless, Freeport-McMoRan Inc. (NYSE:FCX) encountered some short-term difficulties that affected operations despite these impressive outcomes, such as delays in Indonesian export permits and a 7.5% export tax. In addition, a fire at the Grasberg smelter required repairs totaling $100 million, though insurance covered these expenses.

In order to increase productivity and cut expenses, Freeport-McMoRan Inc. (NYSE:FCX) is concentrating on developing technological initiatives in the future. The Bagdad autonomous haulage system, scheduled for deployment in 2025, is one such project aimed at improving productivity and streamlining operations. Building on its impressive 2024 gains, the company is also expanding its leach opportunities, targeting an annual copper production rate of 300 million pounds by the end of 2025. These developments are anticipated to further boost Freeport’s long-term productivity and profitability, especially when paired with brownfield expansions in South America and the United States.

With capital expenditures reaching $4.4 billion annually, Freeport-McMoRan Inc. (NYSE:FCX) remains dedicated to balancing financial restraint and growth investments. As one of the top resource stocks for long-term investment, Freeport-McMoRan is well-positioned to continue growing due to its solid market foundation and continuous operational enhancements.

Overall, FCX ranks 2nd on our list of best natural resources stocks to invest in according to hedge funds. While we acknowledge the potential of FCX as an investment, our conviction lies in the belief that certain AI stocks hold greater promise for delivering higher returns, and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than FCX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

 

READ NEXT: 20 Best AI Stocks To Buy Now and Complete List of 59 AI Companies Under $2 Billion in Market Cap

 

Disclosure: None. This article is originally published at Insider Monkey.