With more than 22 billion pounds of additional copper supply required in 2035 just to meet the copper demand for electric vehicles, you might be wondering if now is a good time to add copper to your portfolio.
Joining The Market Herald Canada to talk about the demand for copper is the CEO of World Copper (TSXV:WCU), Nolan Peterson. We discuss how to invest in copper as well as some tips, cautions and questions to ask company CEOs.
TMH: For investors who are eager to invest in copper, what should they do?
Peterson: Well, they should, you know, look at their portfolio first and think about how it fits in there. And then if they’re comfortable with copper, (and) they like the prospects of it., they need to decide how to best get exposure to it. Some people like to invest in cashflow-producing companies which provide dividends and a stable investment, the blue chips, so to speak. And then that can give you a good, a good modest return if all things play out well. And then others, as you move down into more speculative territory or more into exploration, development can provide a higher return. So you have to identify the company that you want to invest in, the type of risk profile that you’re comfortable with. And then you either have a broker or open a brokerage account or a self-directed account and then fund it.
TMH: When people are looking for companies, a blue chip or a dividend paying company, where should they go for information?
Peterson: The best information is to look at the stocks individually yourself, but I understand most people don’t have that technical knowledge or time to do it. So it always comes down to people you trust, right? You know, who do you trust that knows a bit about the markets, a bit about copper or mining companies or how the industry works? If you don’t have any of those types of people around, read as many analyst reports as you can about the broad market.
What I would caution for people from doing is focusing in on YouTube influencer type celebrities who oftentimes get paid by mining companies to promote certain stocks. And it comes across as very genuine, but it’s generally serving a different purpose. Also it’s hard to, in some cases, to take seriously individual analyst reports for different companies because oftentimes those analysts have put out reports to support a financing or something that that company is doing.
So try to find impartial, unbiased information, which is why I always trust the raw information and when I’m doing an assessment of a company to invest in or, you know, trust people that you personally know and who have no interest other than your own success as well as in line with theirs.
TMH: And are there any best resources or sites that you would use or recommend to potential investors?
Peterson: We have Stockhouse, which is good. I think Reddit is good. You get that community of involvement from different people posting. Read the message board, see what people are saying. Try again to look for the less promotional type of stuff. You know that sometimes people who work for the companies, and this is not something my company does, but they go on there and they start to promote the story and it comes across, “I’m just an average investor, I like this story. …”
But there are sincere people. I go on there and not under my name and not for my company but talk about the companies that I like. And I say I’ve done that analysis. I think it’s a good investment and try to help other investors, but I do it on places like Stockhouse and Reddit and other message boards like that.
TMH: And what about investor conferences, which can provide a one-to-one opportunity to meet and speak directly to the CEOs of mining companies? What questions should investors be asking?
Peterson: That’s a good point, too, especially since it’s a lot easier now with Zoom and webinars to really get in to see presentations that you normally would have to go to like PDAC or VRIC or other conferences around the world to see. And you can talk with people like me directly and ask the questions.
So, questions that I always like to ask during (conferences), the basics, like “What are your plans for the future?” What I like to focus on as an engineer is, OK, you know you have this deposit, it’s great, it’s high grade, whatever the case may be that you’re selling me on it, but how, “What’s your plan to actually make it a mine?” Right? “Is this actually a mineable developable asset?”
And let’s see what some of the CEOs say because I look at some of the companies that are out there that are doing very well, and they sell a good story. But the fundamental of how you’re actually going to mine it one day, it could be 20, 30 years before you’re pulling something out of the ground. And that’s obviously not something they like to talk about. So those are the questions that I like to focus on and ask.
TMH: And, Nolan, what tips can you give a potential copper investor?
Peterson: Just keep your mind open. You know, again, always understand what you’re looking for in an investment. Are you looking for a 10x, 20x, 30x return? Well, you’re not going to get that investing in a blue chip stock, nor should you expect it. If you’re looking for safety and stability, then don’t invest in a junior stock. You know, it’s not for you. There’s too much risk.
So always understand what your portfolio is, how it’s balanced, what you’re looking to get out of it. And you know it’s possible to keep all types of those stocks in one portfolio, nice and balanced, and you get the best of all worlds.
To listen to Nolan Peterson expand on the outlook for copper check out his previous interview on the Expert Exchange.
For more information, visit the World Copper Ltd. website: www.worldcopperltd.com.
Join the discussion: Find out what everybody’s saying about this stock on the World Copper Bullboard, and check out the rest of Stockhouse’s stock forums and message boards.
The material provided in this article is for information only and should not be treated as investment advice. For full disclaimer information, please click here.