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A great way for Canadian investors to diversify their investment portfolio and increase exposure to more asset types is to invest in precious metals.
When investors think of precious metals, they usually gravitate to Gold and Silver and, in rare cases, other precious metals such as lithium.
What many investors are unaware of is a very lucrative and easily overlooked investment opportunity, investing in Copper.
Acquiring Copper stocks, a copper miners ETF, and even copper futures contracts is a great way to gain exposure to the copper industry.
The equity investments are subject to market risks and may not be suitable for all investors. If you have any doubts as to the merits of an investment, you should seek advice from an independent financial advisor. So please invest at your own risk.
Why Copper Stocks?
Copper is the 3rd most consumed industrial metal in the world.
Copper is an integral component in electrical wires, 5g telecommunication cables, motors, and even home products such as door knobs.
As the world continues to move towards dependence on renewable energy assets such as rechargeable batteries and semiconductors, copper demand will continue to grow since it’s an integral manufacturing component of these products.
This means that the copper production sector is poised for significant long-term growth, and this presents a great opportunity for investors.
This has not gone unnoticed among commodities businesses, who have now become major players on the Canadian securities exchange.
Despite this, it is important to note that the copper mining business is very cost-intensive to get into, and the companies that do well long-term are those that are good at keeping costs low while successfully managing prospecting costs too.
Mining companies in the copper industry are categorized into two: Major and Junior.
The major players are characterized by decades of operations, consistency of output, and access to significantly large reserves.
These are safer, more stable long-term-oriented stocks and behave more like blue-chip stocks.
The Juniors’ on the other hand, are much smaller and newer and behave more like growth stocks, and usually have almost no reserves.
Although riskier investments compared to the major mining companies, the junior companies create opportunities for massive growth potential for investors.
In today’s review, we will be looking at some of the best copper mining stocks on the Toronto Stock exchange that are worth looking into.
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Best Copper Stocks in Canada
Turquoise Hill Resources (TSX: TRQ)
Turquoise Hill Resource is a Canadian mineral and development company founded in 1994 with its headquarters in Quebec, Montreal.
The company is a Subsidiary of the Rio Tinto Group.
The company’s primary interests are in Mongolia, and work very closely with the Mongolian government on the Oya Tolgoi Copper-Gold Mine, which is one of the world’s largest copper-gold mines.
The mine is estimated to have $36.3 billion worth of copper reserves.
Turquoise Hill Resources recorded a $1.919 billion revenue year in 2022, which was an 82.81% increase from 2021, with a net income of $0.525 billion.
Copper Mountain Mining Corp (TSX: CMMC)
The Copper Mountain Mining Corp is a copper ore company founded in 2006 and has its headquarters in Vancouver, British Colombia
The company is named after the copper mountain mine, which is its flagship project located near Princeton.
The company also runs an open-pit mine in Queensland, Australia, known as the Eva Copper Project.
The company also happens to be dual-listed on the Australian Stock Exchange and the Toronto stock exchange.
The Copper Mountain Mining Corp has a market cap of $602 million.
Ivanhoe Mines Ltd (TSE: IVN)
Ivanhoe Mines Ltd is a Canadian mining company founded in 1993 and went public in 2012.
It’s based in Vancouver, British Colombia.
Its primary operational interests are in the Democratic Republic of Congo and South Africa.
They operate the Kaoma -Kakula site in the DRC.
The site is projected to have peak annual production of more than 700,000 tones of copper, making it the second-largest copper mine in the world once it reaches full operational capacity.
Teck Resource has a market cap of $12.86 billion and a P/Ratio of 176.92.
Teck Resources Ltd (TSX: TECK A/B)
Teck Resources is a diversified natural resources company founded in 1906 as Comico but later became Teck Resources after merging with Teck in 2001.
The company is based in Vancouver, British Colombia
The company has about 10,700 employees.
The company has operational interests in North and South America, with mines producing over 324,000 tones of copper.
They also have operations in the Highland Valley Copper mine that’s in British Colombia near Logan Lake, which produces 119,000 tones of copper.
The mine also produces 3.4 million pounds of molybdenum.
Teck Resources also owns a 22.5% stake in one of the largest copper-zinc mines in the world, the Antamina Mine in Peru.
The company’s revenue growth and net income have been considerable over the past decade, with each year surpassing the next.
The company recorded revenues of CAD$9.3 billion in 2016, then CAD$12.6 billion in 2018, and although it declined in 2020 to $6.68 billion increased by 61% to 10.76 billion in 2021.
Teck Resource has a market cap of $24.66 billion.
The company has a dividend yield of 0.87%, a forward dividend yield of 6.35%, and a dividend payout ratio of 7.54%.
Risks of Investing in Copper Stocks
As with any investment, it’s important for investors to assess potential risks before deciding to buy copper stocks.
One of these is the cyclical nature of copper demand, and this results in fluctuations in copper prices over time.
This means that, at times, the stock price rises as demand does and sometimes falls as demand for copper declines.
Another risk factor would be volatility in mining expenses. Prospecting and excavation fees are usually very high, and any delays or setbacks in the supply chain of a company can detriment its ability to operate.
These are concerns an investor should look into before they consider investing in a copper stock.
It seems very unlikely that the world’s copper needs will decrease any time soon and as demand for copper increases, it seems clear that there’s no better time to get into Canadian copper stocks than now.
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