David Einhorn makes a case for copper to ride renewable energy trend, recommends two miner stocks

Published Wed, May 12 20212:22 PM EDT

Greenlight Capital's David Einhorn is getting bullish on copper on the back of a demand surge for green energy, and he revealed his best picks to ride the boom in renewables Wednesday at the Sohn Conference. Copper is widely used in batteries and electric motors as well as wind and solar installation because of the metal's special features including electric and thermal conductivity, and corrosion resistance, the hedge fund manager said. "You don't have to be a real genius like Thomas Edison to know that whether you're building electric vehicles chargers storage, solar wind, power generation and transmission, to grow the electric grid, we need lots of copper," Einhorn said. Copper futures just hit a record high of $4.888 per pound on Monday, up nearly 40% in 2021. On Wednesday copper traded above $10,500 per ton, according to data from the London Metal Exchange. Many Wall Street firms raised their forecasts on the metal amid the transition to green energy and tight supply. Goldman called copper "the new oil" and sees prices average $11,000 per metric ton over the next 12 months. Einhorn said the obvious way to play the rise in copper is through mining companies. The first stock he recommended is copper miner Freeport-McMoRan , whose shares are up more than 60% this year already. "It trades at a still reasonable 16 times estimated 2021 earnings. Freeport is essentially a pure play on the copper price," Einhorn said at the conference. The second company the investor highlighted is a "more overlooked" company — Canadian based miner Teck Resources , which is dual listed on both Toronto Stock Exchange and New York Stock Exchange. Teck is undergoing a major copper mine expansion project in Chile, and the company owns 60% of the $5.7 billion project, which will be online in the second half of 2022. "There's significant value," Einhorn said. The project "would by itself would be worth Teck's current market capitalization, even though it won't contribute anything to results until 2023."

David Einhorn speaking at the SOHN conference in New York, May 6, 2019.

Heidi Gutman | CNBC

Copper is widely used in batteries and electric motors as well as wind and solar installation because of the metal's special features including electric and thermal conductivity, and corrosion resistance, the hedge fund manager said.