Freeport-McMoRan, Inc.

FCX Details

Quarterly Highlights (For the Period Ended 30 September 2020): Freeport-McMoRan, Inc. (NYSE: FCX) is a leading international mining company, which operates assets with significant proven and probable reserves of copper, gold, and molybdenum. As on 25 November 2020, the market capitalization of the company stood at ~$34.20 billion. During the third quarter ended 30 September 2020, the company sold 234 thousand ounces of gold, 848 million pounds of copper, and 20 million pounds of molybdenum at an average realized prices of $1,902 per ounce for gold, $3.01 per pound for copper, and $9.23 per pound for molybdenum. During the quarter, operating cash flows totaled $1.2 billion and reported consolidated debt of $10.0 billion.

Quarterly Financial Highlights (Source: Company Reports)

Guidance: The company expects to sell 0.8 million ounces of gold, 3.18 billion pounds of copper, and 80 million pounds of molybdenum in 2020 and is anticipating an increase in sales to increase to 3.85 billion pounds of copper and 1.4 million ounces of gold for the year 2021.

Valuation Methodology:  EV/EBITDA Multiple Based Relative Valuation (Illustrative)

EV/EBITDA Multiple Based Relative Valuation (Source: Refinitiv, Thomson Reuters)

Note: All the forecasted figures are taken from Thomson Reuters, NTM: Next Twelve Months

Stock Recommendation: The company is executing its operating plans and has a decent cost and capital management. As per NYSE, the stock of FCX is trading close to its 52-week high of $23.66 and seems to have reached its market potential. The stock of FCX gave a return of 56.82% in the past three months and a return of 35.59% in the last one month. On a technical front, the stock of FCX has a support level of ~$20.43 and a resistance level of ~$23.72. We have valued the stock using the EV/EBITDA multiple based illustrative relative valuation method and have arrived at a downside of higher single-digit (in % terms). For the said purposes, we have considered Kinross Gold Corp (NYSE: KGC), Arch Resources Inc (NYSE: ARCH), Wheaton Precious Metals Corp (NYSE: WPM), etc., as peers. Considering the current trading levels, returns in the past three months, softer market conditions, and key investment risks, we suggest investors to wait for better entry levels and give an ‘Expensive’ rating on the stock at the closing price of $23.54, up by 1.86% on 25 November 2020.

FCX Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

Clean Energy Fuels Corp.

CLNE Details

Quarterly Highlights (For the Period Ended 30 September 2020): Clean Energy Fuels Corp. (NASDAQ: CLNE) is one of the top providers of the cleanest fuel for the transportation market in North America. As on 25 November 2020, the market capitalization of the company stood at ~$939.80 million. During the third quarter ended 30 September 2020, the company delivered 97.7 million gallons, reflecting a decline of 5% on the third quarter of 2019. This was mainly due to the continuing effects of COVID-19 which impacted the airports, public transit, and government fleet customer markets. At the end of the same period, revenue of the company went down by 4.8% to $70.9 million, due to lower effective fuel prices. However, net loss for the third quarter of 2020 went down to $2.3 million from $4.3 million for the third quarter of 2019 on the GAAP basis.

Quarterly Financial Highlights (Source: Company Reports)

Acceleration in Demand for Renewable Natural Gas: The company has announced extension in contracts for over 20 million gallons of Redeem™ renewable natural gas. This will help the company to meet the continued demand for ultra-low carbon fuel from organic waste across key business segments.

Stock Recommendation: The company expects to report a GAAP net loss of ~$11.0 million for 2020 and adjusted EBITDA for 2020 is likely to be ~$45.0 million. As per NASDAQ, the stock of CLNE is trading close to its 52-week high of $4.86. The stock of CLNE gave a return of 74.26% in the past three months and a return of 84.43% in the last one month. On a technical analysis front, the stock of CLNE has a support level of ~$4.31 and a resistance level of ~$5.24. On a TTM basis, the stock is trading at a P/BV multiple of 1.7x, lower than the industry average (Oil & Gas) of 2.4x. Considering the current trading levels, extension of contracts, quarterly performance, and key investment risks, we recommend a ‘Hold’ rating on the stock at the closing price of $4.74, up by 5.8% on 25 November 2020.

CLNE Daily Technical Chart (Source: Refinitiv, Thomson Reuters)

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