7 Materials Stocks to Buy That Help Build Everything

  • Cleveland-Cliffs (CLF): A vertically integrated U.S. steelmaker that has been in the sector since 1846.
  • Commercial Metals (CMC): This steelmaker operates in North America and Europe, manufacturing, recycling and marketing steel and metal products.
  • Intrepid Potash (IPI): Supplier of strategic chemicals for fertilizer, animal feed and other uses to agriculture, industrial and oilfield services sectors.
  • Nucor (NUE): One of the leading U.S. steel mills with operations that go back to 1905.
  • Steel Dynamics (STLD): Another U.S. steelmaker that also has a large steel recycling business and brokerage.
  • Teck Resources (TECK): This Canada-based industrial metals company has a steelmaking business as well as mines for silver, copper, zinc and other chemicals and metals.
  • Vale (VALE): A major global steel and industrial metals company with operations in Brazil.
a steel frame for a building

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The digital economy has had quite a run during and after the pandemic. But that interest is shifting back to the Old Economy infrastructure sectors. And chief among them are the materials stocks and the companies they represent.

Building for the digital age also requires that the core building blocks of a society are also up to the task. Whether it’s about integrating new tech into low-tech projects or simply replacing old infrastructure with new efforts, materials stocks are where it all starts.

Today, supply chain issues and global demand are driving up prices on most industrial commodity stocks as well as agricultural goods. That gives these companies more pricing power than they’ve had in many years.

And the amount and scale of these projects means these stock will be in demand for years to come. Many have already started their run, but they’re still bargains and have plenty of profits ahead of them.

Ticker Company Current Price
CLF Cleveland-Cliffs $32.08
CMC Commercial Metals $44.57
IPI Intrepid Potash $111.26
NUE Nucor $166.20
STLD Steel Dynamics $88.58
TECK Teck Resources $43.88
VALE Vale $19.62

Cleveland-Cliffs  (CLF)

When you have a company in this sector that has been around since before the Civil War (James K. Polk was president when Cleveland-Cliffs Inc (NYSE:CLF) began), you can be assured it knows how to survive bad times and thrive in good ones.

It takes a management philosophy of finding opportunities in every circumstance and then making sure each new generation continues the tradition.

Right now, CLF is taking advantage of the good times. It has two mines, one in Michigan and one in Minnesota. From these it sells iron ore pellets. It also has an ironworks, coke making facilities and steel mills as well. And it’s all U.S.-made.

CLF stock has gained 72% in the past 12 months, 46% year-to-date. Yet it’s trading at a price-to-earnings ratio of just 5x.

This stock has an A rating in my Portfolio Grader.

Commercial Metals (CMC)

While “Buy American” has certain advantages, especially now, diversifying your risk across markets can also be a smart strategy. That’s the path Commercial Metals (NYSE:CMC) has chosen.

CMC has operations in both the U.S. and Poland. It started as a scrap metal operation in 1915. And its Polish facility mostly remains a steel recycling mill. In the U.S. it has mini-mills and micro-mills as well as recycling operations.

Recycled metals or “scrap” metals are widely used in bridges and roads, as well as automobiles. Recently it has begun to be used to clean industrial wastewater as well.

CMC stock has gained 51% in the past 12 months, 21% YTD, but still trades at a P/E below 6x. And it has a 1.3% dividend.

This stock has an A rating in my Portfolio Grader.

Intrepid Potash (IPI)

While not technically an industrial metals company like the others, Intrepid Potash (NYSE:IPI) does provide strategic metals for a variety of industries. The big one is the agriculture sector.

Because of supply chain issues, as well as rising energy prices and now Russia’s invasion of Ukraine, agricultural prices are soaring. Ukraine is a major wheat exporter and that crop is off the market. That means there’s demand with less supply.

As energy prices rise, farmers need to be as efficient as possible and make sure their yields are maximized. That means growing demand for potash and other chemicals.

What’s more, IPI also provides water and brine to unconventional drilling operations in Permian and other nearby shales. That sector is booming as well.

IPI stock has gained a whopping 251% in the past 12 months, and 150% YTD. Yet it’s still trading at a P/E below 6x.

This stock has an A rating in my Portfolio Grader.

Nucor (NUE)

Given that Nucor (NYSE:NUE) is one of the biggest steel companies in the U.S., it is certainly a top pick when it comes to materials stocks in this market.

But earlier this month, an interesting story came out that NUE has announced it’s investing $15 million in NuScale, a next-generation nuclear power company that is generating (pardon the pun) a deal of interest for its small, modular reactors (SMRs).

This new technology means smaller reactors that can be scaled up or down by adding or removing modules to better fit the power demand needs of a city, town or geographic area. It’s an ideal solution for remote areas as well as places that may anticipate growth in coming years. They’re also safer and much easier to build than legacy nuclear systems.

NUE is likely investing because NuScale will need a steelmaker for containment vessels and this would make the whole operations a U.S.-made venture.

NUE is nearly 120-years old, so it has proven its ability to adapt and thrive. The stock has gained 109% in the past 12 months, and 46% YTD. But it’s trading at a P/E below 7x and has a 1.3% dividend.

This stock has an A rating in my Portfolio Grader.

Steel Dynamics (STLD)

The old “Rust Belt” is back up in action again, and Indiana-based Steel Dynamics (NASDAQ:STLD) is a perfect illustration. The steel towns of the Midwest have been gaining more interest again as domestic steel operations have become of growing economic importance.

STLD is one of many — including ones in this article — that are finding new footing as domestic steel production ramps up both from new rolled steel demand, to recycling of ferrous and non-ferrous metals, to finished products. STLD is involved in all three of these sectors.

The company has a $15 billion market cap, but it has a long runway of growth given the pent up demand for new cars as well as new EV vehicle manufacturers. Also, the infrastructure stimulus bill will mean years of demand for girders for bridges, rebar, guardrails, rails, you name it. It’s the fountainhead of materials stocks.

STLD stock has gained 74% in the past 12 months, 43% YTD. It’s still trading at a P/E below 6x and has a 1.6% dividend.

This stock has an A rating in my Portfolio Grader.

Teck Resources (TECK)

Before you can get the steel or iron into product, you need the raw material to make it in the first place. That’s where Teck Resources (NYSE:TECK) comes in. It’s a Canada-based mining company that has been delivering product to steelmakers and others for years now.

Not only does it mine iron ore, but it also mines coking coal, copper, zinc, lead, silver and other specialty minerals. One of the latter is molybdenum, which is used to make steel that’s more easily welded and when combined with chromium make high-strength steel that has many industrial uses.

It has mining operations in North America as well as South America and has a reliable supply chain to move the materials to its customers.

TECK has gained 101% in the past 12 months, 50% YTD. It has a $22 billion market cap, but a P/E that’s below 10x. However, its big growth has cut its dividend back to less than 1%.

This stock has an A rating in my Portfolio Grader.

Vale (VALE)

This is one of the kings of materials stocks. Like its brethren TECK, Vale (NYSE:VALE) is a mining company. But VALE has a market cap of close to $100 billion. It’s one of the top mining and materials companies in the world.

Not only does this Brazil-based company mine iron ore, manganese and other materials, but it also mines nickel. And that’s a very big deal today because Chinese nickel — China’s one of the largest producers in the world along with Russia — can’t get moved by train across Russia. And shipping it has become more than difficult.

These have been the default markets for large consumers of nickel. And this is where a South American connection is very helpful to the U.S. And with prices sky-rocketing, VALE is reaping the rewards.

While VALE stock has gained on 3% in the past 12 months, it has moved up 41% YTD. It has a P/E that’s sitting below 5x, and it has a 13.3% dividend.

This stock has an A rating in my Portfolio Grader.

On the date of publication, Louis Navellier has positions in CLF, CMC, NUE and STLD in this article. Louis Navellier did not have (either directly or indirectly) any other positions in the securities mentioned in this article.

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