FCX Fell 5.9% In A Day. What To Do Now?
Freeport-McMoRan (FCX) stock is down 5.9% in a day. While history suggests price dips recover, there is risk – specific to downturn resilience. Consider the following data:
- Size: A $63 Bil company with $26 Bil in revenue currently trading at $43.89.
- Fundamentals: Last 12 month revenue growth of 4.6% and operating margin of 26.8%.
- Liquidity: Has Debt to Equity ratio of 0.15 and Cash to Assets ratio of 0.08
- Valuation: Currently trading at P/E multiple of 32.8 and P/EBIT multiple of 8.8
- Has returned (median) 30.3% within a year following sharp dips since 2010. See FCX Dip Buy Analysis.
While we like to buy dips if the fundamentals check out – for FCX, see Buy or Sell FCX Stock – we are wary of falling knives. Specifically, it is worth trying to answer if things get really bad, and FCX drops another 20-30% to $30.72 levels, will we be able to hold on to the stock? What is the worst case scenario? We call it downturn resilience.
Below is a deep dive into Freeport-McMoRan (FCX) downturn resilience – specifically, its performance vs the market during past crises? Turns out, the stock has fared much worse than the S&P 500 index during various economic downturns. We assess this based on both (a) how much the stock fell and, (b) how quickly it recovered.
Below are the details, but before that, as a quick background: FCX provides mining and oil and gas operations across North America, South America, and Indonesia, including key mineral districts and offshore energy assets.
2022 Inflation Shock
- FCX stock fell 51.7% from a high of $51.93 on 25 March 2022 to $25.09 on 14 July 2022 vs. a peak-to-trough decline of 25.4% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 29 April 2024
- Since then, the stock increased to a high of $54.86 on 20 May 2024 , and currently trades at $43.89
| FCX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -51.7% | -25.4% |
| Time to Full Recovery | 655 days | 464 days |
2020 Covid Pandemic
- FCX stock fell 60.8% from a high of $13.53 on 13 January 2020 to $5.31 on 18 March 2020 vs. a peak-to-trough decline of 33.9% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 15 July 2020
| FCX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -60.8% | -33.9% |
| Time to Full Recovery | 119 days | 148 days |
2018 Correction
- FCX stock fell 57.4% from a high of $19.99 on 22 January 2018 to $8.51 on 8 October 2019 vs. a peak-to-trough decline of 19.8% for the S&P 500.
- However, the stock fully recovered to its pre-Crisis peak by 13 November 2020
| FCX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -57.4% | -19.8% |
| Time to Full Recovery | 402 days | 120 days |
2008 Global Financial Crisis
- FCX stock fell 86.7% from a high of $62.93 on 20 May 2008 to $8.40 on 5 December 2008 vs. a peak-to-trough decline of 56.8% for the S&P 500.
- The stock is yet to recover to its pre-Crisis high
| FCX | S&P 500 | |
|---|---|---|
| % Change from Pre-Recession Peak | -86.7% | -56.8% |
| Time to Full Recovery | Not Fully Recovered days | 1480 days |
Worried that FCX could fall much more? You could take a look at the Trefis High Quality (HQ) Portfolio, with a collection of 30 stocks, has a track record of comfortably outperforming its benchmark that includes all 3 – the S&P 500, S&P mid-cap, and Russell 2000 indices. Why is that? As a group, HQ Portfolio stocks provided better returns with less risk versus the benchmark index; less of a roller-coaster ride, as evident in HQ Portfolio performance metrics.