Finance Halo
Company Overview
Southern Copper Corporation (SCCO) is a leading global producer of copper and molybdenum, with significant operations in Peru and Mexico. As a subsidiary of Grupo Mexico, SCCO is one of the largest copper producers in the world. The company's core business includes mining, smelting, and refining of copper, as well as the production of other valuable metals like molybdenum, zinc, and silver. SCCO is known for its low-cost, high-efficiency operations and substantial long-term growth potential driven by its extensive reserves.
Price Action Analysis
Daily Chart (3-Month): The daily chart shows a strong uptrend, particularly in the last month. After a period of consolidation and choppiness in October and November, the price began a steady ascent in December. Recent price action, especially in January, is characterized by strong bullish candles and increasing volume, indicating growing buying interest. Key resistance levels appear to have been broken, with the stock consistently trading at higher prices. The upward momentum is notable, with the stock reaching new highs within this period.
Weekly Chart (2-Year): The weekly chart reveals a longer-term upward trend that has been in place for the past two years, albeit with significant pullbacks. The current surge in the last few months is a continuation and acceleration of this broader trend. The price has decisively broken above previous resistance levels established in early 2023. Volume has been robust during this recent upward move, supporting the strength of the trend. There is clear support identified at lower price levels that have held firm during previous corrections.
News & Catalysts
Recent News and Analyst Updates:
- Strong Q3 Financial Results: Southern Copper reported Q3 earnings per share (EPS) of $1.35, exceeding analyst expectations of $1.22, and revenue of $3.4 billion, surpassing the forecast of $3.19 billion. This positive financial performance has likely contributed to the recent upward price momentum. (Source: Various financial news outlets, citing company reports)
- All-Time Highs and Strong YTD Performance: The stock recently reached an all-time high of $177.41 USD and has gained approximately 95.26% over the past year, with a significant 27.44% increase in the last month alone. This performance outpaces the broader market and the Basic Materials sector, reflecting strong investor confidence and potentially favorable commodity price trends. (Source: Financial news data)
- Mixed Analyst Ratings and Price Targets: While the stock shows strong price appreciation, analyst sentiment appears mixed. Consensus ratings lean towards "Hold," with average price targets around $126.36, suggesting some analysts see limited upside or potential for a pullback from current levels. However, individual targets vary, with some as high as $182. (Source: Financial data providers)
Fondamental analysis
Key Financial Metrics and Estimates
| Metric | Value | Trend/Notes |
|---|---|---|
| Market Cap | $148.53 B | Large-cap |
| P/E Ratio | 38.34 | Higher than historical average, reflecting growth expectations |
| Dividend Yield | 2.06% | Consistent dividend payments |
| Q3 EPS | $1.35 | Beat estimates ($1.22) |
| Q3 Revenue | $3.4 B | Beat estimates ($3.19 B) |
| Expected Next EPS | $1.44 | ~42.57% YoY increase expected |
| Expected Next Revenue | N/A | ~30.11% YoY increase expected |
Valuation and Profitability
| Metric | Value | Notes |
|---|---|---|
| Profit Margins | Strong | Details not provided, but company noted for efficiency |
| Debt Levels | Moderate | Financial health rated as 'GREAT' |
Analyst Consensus
| Consensus Rating | Average Price Target | Notes |
|---|---|---|
| Hold | $126.36 | Mixed sentiment, some targets higher/lower |
Key Takeaways: SCCO demonstrates robust financial performance, consistently beating earnings and revenue expectations. The company maintains a strong balance sheet with moderate debt and pays a consistent dividend. While the current P/E ratio is elevated, it reflects high growth expectations. The mixed analyst ratings suggest a divergence of opinion on the stock's near-term trajectory, despite its strong fundamental backing and recent price surge.
Market & Sentiment Context
Market Context: The broader market sentiment for base metals, particularly copper, has been supportive. Factors such as global economic recovery hopes, supply constraints, and increased demand from green energy initiatives (e.g., electric vehicles, renewable energy infrastructure) are contributing to a positive outlook for copper producers. SCCO, being a major player with significant reserves, is well-positioned to benefit from these trends.
Investor Sentiment: The recent price action on the daily and weekly charts, characterized by strong bullish candles and increasing volume, suggests a bullish sentiment among investors. This could indicate accumulation as traders and investors capitalize on the upward momentum and favorable commodity outlook. The stock breaking through previous resistance levels with conviction further supports this positive sentiment.
Investment Outlook
SCCO is exhibiting a strong uptrend on both daily and weekly charts, supported by positive fundamental data and a favorable commodity market environment. The recent price surge, accompanied by increasing volume, indicates significant buying interest and conviction.
Catalysts:
- Continued strength in copper prices driven by global demand and supply dynamics.
- SCCO's expansion projects and efficient operations are likely to drive future earnings growth.
- Potential for further positive earnings surprises, given the historical trend of beating estimates.
Risks:
- Potential for copper price volatility due to macroeconomic shifts or geopolitical events.
- Regulatory or environmental challenges in mining regions.
- Analyst price targets suggest some caution, indicating a potential for mean reversion if the market re-evaluates growth expectations.
Key Buy/Sell Levels
Current Price: SCCO is currently trading around $178.90.
Support Levels:
-
$160 - $165 Zone: This level was a significant resistance area in December before the strong breakout. It has now potentially transitioned into a support zone.
- Status: Touched. The price briefly dipped into this range in late December before resuming its upward move.
- Significance: Represents a prior breakout point, often acting as a psychological and technical support level. The price consolidation in this area on the daily chart could also indicate a volume cluster.
-
$140 - $145 Zone: This area served as resistance in late November and early December.
- Status: Not touched recently. It is approximately 19.5% below the current price ($35.00).
- Significance: Represents a more significant prior resistance level that, if retested, would indicate a considerable pullback.
Resistance Levels:
- $180 - $185 Zone: The current trading range, representing the all-time high area.
- Status: The stock is currently trading within this zone. A decisive close above $185 would signal a continuation of the uptrend.
- Significance: This is the immediate resistance and the area of new all-time highs. Breakouts here would confirm further bullish momentum.
We will draw horizontal lines to mark these key levels.
Risk-Managed Trade Ideas:
- Buy on Pullback: A potential entry point could be observed if the price pulls back to the $160-$165 support zone. This would offer a more favorable risk/reward ratio, entering after a successful test of prior resistance turned support.
- Breakout Confirmation: For aggressive traders, a confirmed breakout above the $180-$185 all-time high resistance, especially on increased volume, could signal a continuation buy. A target could be set based on Fibonacci extensions or psychological round numbers.
- Stop-Loss Placement: For any long position initiated, a stop-loss order below the identified support levels (e.g., below $160 or $140 depending on the entry strategy) would be prudent to manage risk.
Summary & Takeaways
Southern Copper Corporation (SCCO) is demonstrating a powerful uptrend, supported by strong fundamentals and a favorable market for copper. The company's recent financial results have exceeded expectations, and its stock has achieved new all-time highs. While the upward momentum is undeniable, the mixed analyst sentiment and the proximity to all-time highs warrant a cautious yet opportunistic approach. Key support levels to watch for potential entry points on pullbacks are $160-$165 and $140-$145, while a confirmed breakout above $185 could signal further upside. Investors should remain aware of copper price volatility and broader market conditions.