Why I think this FTSE 100 stock could surge in the new bull market

I reckon if the copper price maintains its uptrend, we could see earnings upgrades for this FTSE 100 company. I’d buy the stock for the new bull market.

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Since 1 March, the price of copper has been surging higher. And copper can be a decent leading indicator of the general economic cycle. Indeed, if orders for copper are increasing and causing the price to rise, we may see good economic times ahead. And a new bull market for shares.

I don’t think it’s a coincidence the price of copper began its rise close to the bottom of the coronavirus-induced stock market crash in the spring. Stocks weren’t the only prices to crash because commodity prices did too, including copper. And, as sure as day follows night, economic cycles turn up just after they’ve turned down. So, it makes sense speculators would pile into both stocks and commodities near the bottom in anticipation of their next up-legs.

Fundamentals will drive the new bull market

But I don’t believe speculation alone can carry price movements very far. For a commodity or a stock to sustain its upwards movement over a long time, the underlying fundamentals must drive the price. And copper has been shooting higher in an uptrend for almost eight months. During that time, the price has risen by more than 40%. Indeed, this looks like a solid and sustainable move higher, to me. And there’s no sign of any hesitation in the movement yet, so there could be more to come – perhaps much more.

Things have been so bad for so long both economically and in the markets that I’ve been convinced for some time that we’ll see a decades-long bull run ahead. And I’m not the only bull around. Just yesterday, successful trader and investor Mark Minervini Tweeted: “Based on history, this bull market is in its early stage.” And I think he’s worth listening to because, over the past few years, his market calls have been spot on.

Minervini went on to say: “With the Fed committed to keeping [interest] rates low and aggressively defending the economy, corrections are buyable cyclical events within a secular bull market.” Of course, he’s talking about the stock market in the US. But I wouldn’t underestimate the influence American policies can have on the rest of the world, including the UK. And the UK stock market is notorious for taking its lead from across the ‘pond’.

A copper play I’d invest in today

Meanwhile, FTSE 100 mining company and copper producer Antofagasta (LSE: ANTO) released a production report today. And with the price of copper on the rise, we can expect better profits ahead for the company. Indeed, City analysts have pencilled in a rise in earnings next year more than 50%. At first glance, I think Antofagasta shares look like a good place to be as the new bull market unfolds.

The firm’s production of copper, gold and molybdenum was “in line with expectations” in the third quarter of 2020. And the directors expect steady production ahead in the near term. I reckon if the price of copper maintains its uptrend, we could see some earnings upgrades ahead.

With the share price close to 1,040p, the forward-looking earnings multiple is just below 20 for 2021. I’d buy the stock now and tuck it away for the long haul.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Kevin Godbold has no position in any share mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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