Our team has been approached by a group of potential investors and financial
institutions in order to evaluate the prospective of BHP Billiton and Freeport McMoran. The
basis of our study is to provide detailed examination of the possibility to invest in one of the
mentioned companies and also to lend funds to one of them. Our analysis aims to provide
detailed answers to the questions posed and to facilitate the selection process.
During our examination of the companies, the industry and the projections for the
future we have encountered many problems and evidences that reveal which company serves
better the interest of the investors and lenders. BHP Billiton is the market leader by market
capitalization and Freeport McMoran is fifth. However, during the detailed ratio analyses for
the current performance and the past 5 years our team have found evidences that back up
Freeport as a better choice for lending funds. There are various reasons that are examined in
details in this research, but one of the main factors is that Freeport has better liquidity than
BHP Billiton. This is very important indicator for every lender and we believe that the
company is the better choice.
In terms of potential investment both companies possess strong background and
potential. In fact, BHP is a more diversified company, while Freeport relies solely on copper
and gold. The size of Freeport is not that easily comparable to BHP, but in fact many
evidences reveal that it is operated more efficiently and gives better prospective. Therefore,
we suggest that Freeport is also a better choice for investing.
The industry provides evidence that both BHP and Freeport have similarly performing
stock prices and they are moving together. There is a slight valuation advantage of BHP
Billiton, but despite the market dominance and potential takeover of Rio Tinto the company
size is a weakness in a sense for the performance. Freeport... [continues]
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