Why Freeport-McMoRan Inc. Stock Fell 18% in May

By Markets Fool.com

An oil rig in the Gulf of Mexico. Image source: Freeport-McMoRan.

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What: Freeport-McMoRan Inc.'s shares fell just over 18% last month. However, the stock is still higher by nearly 70% on the year, with the big move upward taking place between mid-January and late April, a period in which Freeport's stock rallied more than 220%. It's been some ride so far in 2016 for Freeport's shareholders.

So what: In late April, Freeport announced quarterly earnings. The news wasn't great, with a loss including one-time items of $3.35 a share. And even if you take out those charges, the miner still lost $0.16 a share, which isn't exactly inspiring. However, the bigger news was probably the fact that a heavy debt load remains an issue, and little progress has been made in dealing with the company's troublesome oil division.

As you might expect, investor enthusiasm for Freeport cooled along with the price of the main commodities it produces.Then May came, and copper prices fell roughly 8.5% while gold moved lower by a little more than 6%. Although oil was actually up for the month, that division of the company is a cash drain, and the improvement in oil prices wasn't enough to turn what in hindsight was a bad investment (made at the peak of the oil market) around.

Now what: The swift ups and downs Freeport shares have experienced so far this year should probably scare most conservative investors to the sidelines. At the very least, those with sensitive stomachs should wait until there's more clarity on the oil side of the business before jumping in, here. That said, for more aggressive investors, there remains notable turnaround appeal in Freeport's shares, assuming commodity prices hold up and the company can fix its oil problem.

The article Why Freeport-McMoRan Inc. Stock Fell 18% in May originally appeared on Fool.com.

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Reuben Brewer has no position in any stocks mentioned. The Motley Fool owns shares of Freeport-McMoRan Copper & Gold, Inc.. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.