Should you buy Southern Copper shares in Q3 amid the rising copper market deficit?

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on Jul 22, 2021
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  • Southern Copper shares edged higher 2.43% on Wednesday after news of a rising copper market deficit.
  • International Copper Study Group (ICSG) said the refined copper market had a 75,000 tonnes deficit in April.
  • It showed a significant rise from 13,000 tonnes in March. So is it time to buy SCCO stock?

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Southern Copper Corp (NYSE:SCCO) shares edged higher 2.43% on Wednesday after the latest market report from the International Copper Study Group (ICSG) showed a rising deficit.

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According to the ICSG report published Wednesday, the copper market deficit soared to 75,000 tonnes in April, up from 13,000 tonnes in March. The global refined copper market produced an output of 2.07 million tonnes in April while consumption topped 2.14 million tonnes. 

It also showed that the 4-month surplus through April fell to 69,000 tonnes down from 110,000 tonnes in the same period a year ago.

Should you invest in Southern Copper Shares now?

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Copper prices play a big part in the performance of copper mining companies. And as consumption continues to exceed output, the copper price will likely go higher, boosting companies’ stock prices like Southern Copper.

Southern Copper’s stock price dipped since the start of May in line with copper prices, but things could be about to change following Wednesday’s report.

From a valuation perspective, SCCO shares trade at a P/E ratio of 23.18, making the stock an attractive option for value investors. In addition, the relatively lower forward P/E ratio of 16.81 implies significant earnings growth expectations for the next 12 months.

Therefore, Southern Copper is an exciting stock to watch in Q3 for those looking to invest in basic materials and metals. It could be one of the best performers if copper prices bounce back to retest this year’s highs.

Source – TradingView

Technical overview: Southern Copper stock price predictions for Q3 2021

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Technically, Southern Copper shares appear to have recently bounced back after last week’s pullback. However, the stock price still has a lot of room to cover before crossing above the 100-day moving average.

Investors can target extended rebounds at approximately $65.66 and $68.33, while the support levels are $60.97 and $58.41. The stock closed at $63.55 on Wednesday.

Bottom line: why buy Southern Copper shares in August 2021?

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In summary, Southern Copper’s stock price seems poised for more upward movement following Wednesday’s rebound. And given the attractive valuation of SCCO coupled with the prospect of rising copper prices, now could be the time to invest in the company. 

The 22% pullback since 11th May creates a compelling entry opportunity.

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