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Ken Heebner Bullish on Commoditiy Stocks: FreeportMcMoRan Copper & Gold Inc., Southern Copper Corp., Teck Resources Limited

Ken Heebner Bullish on Commoditiy Stocks

December 16, 2009 | About:
(GuruFocus, December 16, 2009) Ken Heebner is bullish on stock market. Today’s Fed action (or inaction) of keeping the interest rate at the historical low is exact the kind of catalyst to fuel his bullish thesis on stock market. For him, the 2007-2008 disastrous period is over. The low utilization ratio of capacity and the high unemployment rate make the inflation pressure all but disappear. There will be no double dip because the optimism in the people is creating new products. We had a nightmare but things are “normalized”, so we are going to have a good few years of growth ahead of us.

Watch this video with Ken Heebner and Robert Doll interviewed by CNBC. Robert Doll sounds a bit more cautious, but even he shadowed by the Heenber’s enthusiasm. Both men recommended a few stocks:

Heebner’s rational for recommendation is that global growth will lead to increase use of copper and metallurgic core, which goes into steel making. Hence the basic material stock should do well in this environment.

As of September 30, 2009, Heebner was over-weighting on basic material (11.4% of total, click here for his asset allocation). He owns the following stocks that are engaged in mining for basic materials:

1. FreeportMcMoRan Copper & Gold Inc. (NYSE:FCX)

Freeport-McMoRan is engaged in mineral exploration and development, mining and milling of copper, gold, and silver in Indonesia, and the smelting and refining of copper concentrates in Spain and Indonesia. Freeportmcmoran Copper & Gold Inc. has a market cap of $33.58 billion; its shares were traded at around $78.09 with a P/E ratio of 29 and P/S ratio of 1.9. Freeportmcmoran Copper & Gold Inc. had an annual average earning growth of 15.1% over the past 10 years.

Heebner owns 6million shares of FCX as of 3Q09.

2. Southern Copper Corp. (PCU)

Southern Peru Copper Corp. objective is to increase stockholder value through earnings and cash flow growth in varied market conditions. Southern Copper Corp. has a market cap of $28.27 billion; its shares were traded at around $33.26 with a P/E ratio of 62.7 and P/S ratio of 5.8. The dividend yield of Southern Copper Corp. stocks is 2.2%. Southern Copper Corp. had an annual average earning growth of 46.7% over the past 10 years.

Heebner owns 9.6 million shares of PCU as of September 30, 2009.

3. Teck Resources Limited (TCK)

Teck Resources Limited, formerly Teck Cominco Limited, is a diversified resource company committed to responsible mining and mineral development with major business units focused on copper, metallurgical coal, zinc, gold and energy. Teck Cominco Ltd. has a market cap of $21.19 billion; its shares were traded at around $36.57 with a P/E ratio of 24.5 and P/S ratio of 3.3.

GuruFocus data shows that Heebner sold his about half million shares of the stock out in 3Q09. Yet he just went to a national TV program recommending the stock. The stock has climbed from less than $25 to more than $35 in the past three month. Perhaps he has changed his mind since then?

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Rating: 3.6/5 (7 votes)


Ed Nottingham
Ed Nottingham - 7 years ago    Report SPAM

THE OLDGURU PURCHASED FCX @ 22.20 AND SOLD 11/26/09 @ 87.20.

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