Copper has been on fire, touching $10,000 per ton this week . Will McDonough, CEO of merchant bank Corestone Capital, says he has “not seen this level of interest and conversation on copper.” “Copper is going through some serious spikes and prices are likely to be much higher in the future. I think it is the biggest investment opportunity right now and a large contributor to demand is the transition towards carbon neutral and net zero goals,” he told CNBC Pro on April 25. Copper is used in data centers, wind turbines and electric vehicles, among other things. “Any population growth or industrial growth leads to growth in copper demand. So it’s almost like the world needs copper, no matter which way it goes. So, having copper in your portfolio as a long-term asset is a no brainer to me,” McDonough said. He suggests that investors have around 5%-10% of their portfolio invested in “stores of value,” which includes copper and other commodities like gold, silver, platinum and lithium. ‘A great company’ Among the stocks with an exposure to copper that McDonough is bullish on is the New York Stock Exchange-listed Sociedad Quimica y Minera de Chile SA (SQM). The Chilean chemicals company is a “massive producer of lithium and copper. And with the whole battery and electrification movement, there is going to be so much demand for lithium and copper that the company can benefit from,” the investment manager said. McDonough’s optimism on SQM comes despite a 31.2% dip in its shares in the last 12 months. “It is a great company and we track it very closely,” he said. FactSet data shows that 12 analysts have a buy or overweight rating on SQM, four give it a hold rating, and one is underweight. Analysts’ average price target for the stock is $64.07, giving it around 34.9% potential upside. ‘Well diversified company’ Another stock on McDonough’s radar is Australian miner BHP , thanks to its exposure not just to copper, but also to gold and iron ore. “It is a really well-diversified company, so it is going to be tough to beat them,” he said. Shares in BHP have been down by 3% in the last 12 months. According to FactSet data, of 21 analysts covering the stock, seven give it a buy or overweight rating, 13 have hold ratings and one is underweight. The average price target is 46.14 Australian dollars ($30.36), giving it potential upside of 6.4%. Copper futures Aside from stocks, McDonough suggests buying copper futures as a good way to play the opportunities in the copper market and the rising demand for the metal. “I think that the price of copper is way under-appreciated. So, it is very interesting to gain exposure to the precious metal through copper futures,” he said.
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