Critical Contrast: Freeport-McMoRan (NYSE:FCX) and Lithium Americas (Argentina) (NYSE:LAAC)

Freeport-McMoRan (NYSE:FCX) and Lithium Americas (Argentina) (NYSE:LAAC) are both basic materials companies, but which is the superior investment? We will compare the two businesses based on the strength of their dividends, analyst recommendations, valuation, institutional ownership, earnings, profitability and risk.

Analyst Ratings

This is a breakdown of current ratings and price targets for Freeport-McMoRan and Lithium Americas (Argentina), as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Freeport-McMoRan	0	4	10	1	2.80
Lithium Americas (Argentina)	0	4	4	1	2.67

Freeport-McMoRan presently has a consensus price target of $53.07, suggesting a potential upside of 26.93%. Lithium Americas (Argentina) has a consensus price target of $8.21, suggesting a potential upside of 216.92%. Given Lithium Americas (Argentina)’s higher possible upside, analysts clearly believe Lithium Americas (Argentina) is more favorable than Freeport-McMoRan.

Valuation and Earnings

This table compares Freeport-McMoRan and Lithium Americas (Argentina)”s top-line revenue, earnings per share (EPS) and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
Freeport-McMoRan	$24.67 billion	2.43	$1.85 billion	$1.13	37.00
Lithium Americas (Argentina)	N/A	N/A	$1.29 billion	$7.99	0.32

Freeport-McMoRan has higher revenue and earnings than Lithium Americas (Argentina). Lithium Americas (Argentina) is trading at a lower price-to-earnings ratio than Freeport-McMoRan, indicating that it is currently the more affordable of the two stocks.

Profitability

This table compares Freeport-McMoRan and Lithium Americas (Argentina)’s net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Freeport-McMoRan	7.83%	7.60%	3.95%
Lithium Americas (Argentina)	N/A	-0.25%	-0.20%

Insider and Institutional Ownership

80.8% of Freeport-McMoRan shares are owned by institutional investors. Comparatively, 49.2% of Lithium Americas (Argentina) shares are owned by institutional investors. 0.8% of Freeport-McMoRan shares are owned by company insiders. Comparatively, 19.8% of Lithium Americas (Argentina) shares are owned by company insiders. Strong institutional ownership is an indication that endowments, hedge funds and large money managers believe a stock will outperform the market over the long term.

Risk & Volatility

Freeport-McMoRan has a beta of 1.89, indicating that its stock price is 89% more volatile than the S&P 500. Comparatively, Lithium Americas (Argentina) has a beta of 1.32, indicating that its stock price is 32% more volatile than the S&P 500.

Summary

Freeport-McMoRan beats Lithium Americas (Argentina) on 10 of the 13 factors compared between the two stocks.

About Freeport-McMoRan

Freeport-McMoRan Inc. engages in the mining of mineral properties in North America, South America, and Indonesia. It primarily explores for copper, gold, molybdenum, silver, and other metals. The company's assets include the Grasberg minerals district in Indonesia; Morenci, Bagdad, Safford, Sierrita, and Miami in Arizona; Chino and Tyrone in New Mexico; and Henderson and Climax in Colorado, North America, as well as Cerro Verde in Peru and El Abra in Chile. The company was formerly known as Freeport-McMoRan Copper & Gold Inc. and changed its name to Freeport-McMoRan Inc. in July 2014. Freeport-McMoRan Inc. was incorporated in 1987 and is headquartered in Phoenix, Arizona.

About Lithium Americas (Argentina)

Lithium Americas (Argentina) Corp. operates as a resource company. The company explores for lithium deposits. The company owns interests in the Cauchari-Olaroz project located in Jujuy province of Argentina. It also has a pipeline of development and exploration stage projects, including the Pastos Grandes project and the Sal de la Puna project located in Salta Province in northwestern Argentina. Lithium Americas (Argentina) Corp. is headquartered in Vancouver, Canada.