Copper (HGH25), often dubbed the "new oil," is the backbone of modern industries and at the core of a multi-year bull market, powering everything from construction and electronics to renewable energy and artificial intelligence (AI)-driven data centers.

Despite a stumble since the May peak, fueled by concerns over China’s demand and a strengthening U.S. dollar, the red metal is poised for a resurgence. Demand for copper-intensive technologies is accelerating, with China's clean energy push alone expected to consume 3.1 million tons by 2030 - a 26% share of its total demand.

On the supply side, constraints like declining ore grades, prolonged project timelines, and recurring production disruptions have tightened the market. This supply-demand imbalance is expected to drive prices upward, with JPMorgan analyst Greg Shearer predicting copper could reach $10,400 per metric ton by late 2025.

Amid this backdrop, Southern Copper Corporation (SCCO) emerges as a smart bet. With the largest copper reserves and industry-low production costs, SCCO blends operational strength with shareholder-focused dividends. Last week, JPMorgan analyst Rodolfo Angele upgraded the stock, lifting its target price. For investors banking on copper’s rebound, here’s why SCCO could be worth a closer look.

About Southern Copper Stock

Southern Copper Corporation (SCCO), founded in 1952 and headquartered in Phoenix, Arizona, is a titan in global copper production, boasting the industry’s largest reserves. Operating across Peru, Mexico, Argentina, Ecuador, and Chile, the company drives the extraction, smelting, and refinement of copper and other minerals. With a market cap of $79.7 billion, SCCO is a formidable player in the global industry supply chain.

Despite slipping 21.7% from its May highs of $129.79, shares of Southern Copper have soared 35.6% over the past 52 weeks. The stock has outshined the S&P 500 Index's ($SPX) 30.3% rally and the Global X Copper Miners ETF’s (COPX) 20.7% returns over this time frame, cementing SCCO’s position as a standout performer in a volatile market.

Southern Copper’s Shareholder Returns

On Nov. 21, Southern Copper rewarded shareholders with a $0.70 cash dividend and a 0.0062 stock dividend per share, showcasing its investor-first commitment. Offering a forward annualized dividend of $2.78 per share and a 2.74% yield - dwarfing the S&P 500's dividend yield of 1.15% - SCCO stands out as a solid pick for passive income investors.

With a 61.6% payout ratio, the company strikes a balance between rewarding shareholders and fueling future growth, making it an appealing choice for investors seeking strong yields and long-term value.

Southern Copper Rises After Q3 Earnings Beat

On Oct. 22, Southern Copper delivered its Q3 earnings report, pushing its stock up nearly 2% on the day. Adjusted EPS hit $1.15, a 43.8% year-over-year surge, outpacing analysts’ predictions by 2.7%. Revenue rose 17% to $2.9 billion, narrowly missing estimates of $2.94 billion. Higher sales volumes of copper, molybdenum, silver (SIH25), and zinc, coupled with rising metal prices (except molybdenum), all underpinned by sharp cost controls, drove these gains.

The mining giant produced 252,219 tons of copper in Q3, an 11.5% annual uptick driven by rising production at its open pit operations. Peruvian mines saw an 18% sequential boost thanks to richer ore grades and improved recoveries, while Mexican output rose 7.3%. Total copper production in 2024 hit 734,963 tons, an 8.7% jump year-over-year, with sales climbing 5.3% to 708,248 tons.

Net cash from operating activities reached $1.44 billion, a significant rise from $1.05 billion a year ago. By quarter’s end, Southern Copper held $2.65 billion in cash, up from $1.15 billion in late 2023, while reducing long-term debt to $5.76 billion from $6.25 billion. Capital investments totaled $792 million for the first nine months of 2024, marking a 5.2% annual increase and representing 30.7% of net income.

What’s Next for Southern Copper?

On the Tia Maria Project, Southern Copper remains optimistic about its potential to inject $17.5 billion in export value at current copper prices and $3.4 billion in taxes and royalties over its first 20 years of operation. With a historic capital budget of $1.4 billion under review, an updated estimate is expected by year-end. Initial groundwork is set to commence soon, including road building, operator training, and infrastructure installation.

Chairman German Larrea struck an optimistic note, citing the resilience of the U.S. economy, the Federal Reserve's rate-cut cycle, and China’s stimulus measures as tailwinds for copper prices. Looking further ahead, he highlighted copper's pivotal role in the clean energy and AI revolutions, which is expected to support stronger long-term demand.

Overall, Southern Copper’s disciplined strategy of low-cost organic growth, bolstered by volume expansions and cost controls, positions it for sustained profitability.

Analysts tracking Southern Copper anticipate the company's profit to surge 44.1% year over year to $4.48 per share in fiscal 2024, with further bottom-line growth of 1.8% to $4.56 per share in fiscal 2025.

What Do Analysts Expect for Southern Copper Stock?

Last week, JPMorgan gave Southern Copper a fresh look, upgrading the stock to “Neutral” from “Underweight” with a price target jump to $92.50. The shift was fueled by the Tia Maria project finally making it into estimates, coupled with the brokerage firm’s bullish stance on copper prices.

Known as a pure play on the red metal, Southern Copper's 85% revenue dependency on copper makes it a standout proxy - almost a copper ETF in disguise, says JPMorgan, which justifies SCCO’s richer valuation relative to its copper mining peers.

The bullish note is a relatively rare one for SCCO, but it was enough to raise the stock’s consensus rating on Wall Street from “Moderate Sell” to “Hold.” Of the nine analysts covering the stock, only one rates it as a “Strong Buy,” four suggest a “Hold,” one recommends a “Moderate Sell,” and the remaining three rate it as a “Strong Sell.”

Although the stock trades above the average analyst price target of $94.35, the Street-high target of $142 suggests the copper mining stock could rally as much as 39.8%.