Worried about the falling dollar? Well, let me tell you, with the Federal Reserve keeping the federal funds rate near zero for the next few years, the dollar is going to stay low. However, this opens up a world of opportunity for a special class of stocks: commodities (and those who play a supporting role to commodities). This is because as the value of the dollar drops, the price of commodities (like gold and corn) goes up.

Now, owning these kinds of stocks requires a little more fortitude because commodities are known for their dramatic ups and downs. But for investors with a strong stomach and an eye for the big picture, these stocks have a lot of potential for the long run. The following group covers everything from precious metals to industrial chemicals to farm equipment, but they are all tied together by one thing: Rising commodities prices.

Allied Nevada Gold (NYSE:ANV) is a tremendous play on gold prices, and its  prospects for the next few quarters are quite bright. In particular, ANV’s Hycroft gold mine is maintaining an excellent operating record with no lost time to accidents or significant environmental incidents. The company is working to develop this operation into a world-class, large-scale milling operation. This project is expected to yield a 34% after-tax rate of return.

Especially considering that this is a gold stock, ANV has had a relatively smooth ride. Whereas the rest of the gold industry has declined 2% in the past 12 months, ANV has made a respectable 22% gain. Analysts expect it to increase earnings by 343%. This leaves the larger industry — which is slated for just 1.7% earnings growth — in the dust. As the company hammers out its plans for the Hycroft operation, I expect increased profit margins will translate into great stock value appreciation.
2012 Estimated Sales Growth: 134.8%
2012 Estimated Earnings Growth: 342.5%

Darling International (NYSE:DAR) has perfected the art of recycling. Its rendering division, which accounts for 75% of sales, collects byproducts from food processing companies and recycles them into components for everything from jet fuel and bio-plastics to cattle feed and soap. Now, as the price of corn and other crops goes up, Darling’s rendered products become much more attractive. Cattle farmers opt for Darling’s inexpensive and protein-rich animal meal products, and green trucking companies choose Darling’s premium biodiesel fuel rather than pricier corn-based products.

And the falling dollar isn’t the only trend that will pump up Darling’s bottom line — consumers and regulators alike are becoming more environmentally conscious, so this company’s diverse and eco-friendly operations are in hot demand. So it’s no wonder that, next quarter, analysts expect Darling to increase earnings by more than 183% — while profits will climb an average of 26% for the waste management industry. DAR is a fabulous pick for 2012.
2012 Estimated Sales Growth: -3.1%
2012 Estimated Earnings Growth: -7.1%

LSB Industries (NYSE:LXU) is another company whose fortunes are tied to rising crop prices. As a producer of nitrate and ammonia fertilizers for agricultural markets, LSB products help farmers yield the most corn from their fields. The company experienced depressed earnings last quarter due to a delay in producing ammonia fertilizer products, but it has fully recovered since then. Also, tight supply-demand conditions in the agricultural commodities markets should boost demand for LSB’s nitrogen fertilizers.

For its climate control business, management is adapting to the times by investing in its portfolio of green products, including geothermal heat pumps. LSB recognizes that commercial and institutional construction sectors have softened, but demand for environmentally friendly construction technology should remain firm. This is a company that has its fingers in many lucrative pots.
2012 Estimated Sales Growth: 6.1%
2012 Estimated Earnings Growth: 12.5%

Titan International (NYSE:TWI) also likes to see farmers bring in more profits — after all, the company’s agriculture business makes up over three-quarters of sale. When farmers have more disposable income, they’ll put that cash to use by investing in the latest and greatest farm equipment.

And things are looking good for Titan’s other businesses in the construction and mining markets. Construction equipment is in demand due to an uptick in building activity, and hot metal demand is fueling a boom in global mining. The best part is that, with 79% sales growth and 425% earnings growth in the last quarter, Titan is only getting warmed up. The company’s current backlog is the largest in its history, and Titan has received word that most of its customers will increase their orders for the next year. This is a fantastic momentum play.
2012 Estimated Sales Growth: 23%
2012 Estimated Earnings Growth: 52.5%

Twin Disc (NASDAQ:TWIN) is the one-stop shop for heavy-duty power transmission products. Whether they’re for a farm tractor, a mining truck, oil rig, logging equipment or a crane, Twin’s products will make sure that the equipment can power through the job. Just as in the case with Titan International, Twin performs well when commodities prices rise.

In the last quarter, the company’s sales jumped 32% and its earnings soared 260%. And this growth shows no sign of stopping. Company leadership was excited to announce that its six-month backlog was a record $164.5 million compared with a previous record of $99.9 million last year. As a result, management remains optimistic about 2012, as do I.
2012 Estimated Sales Growth: 6.4%
2012 Estimated Earnings Growth: -8.9%