Best Basic Materials Stock

The sheer scope of companies pooled into the basic materials sector is large enough to cast your investment net far and wide. Chemical manufacturers, forest and wood product processors, minerals and metal mining companies and packaging product manufacturers are included in the mix. Here are basic materials stocks to stay abreast of this year.

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Contributor, Benzinga
April 12, 2024

Freeport-McMoRan (NYSE:FCX)

Freeport-McMoRan Inc is an international mining company. It operates geographically diverse assets with proven and probable mineral reserves of copper, gold and molybdenum. The company’s portfolio of assets includes the Grasberg minerals district in Indonesia; and mining operations in North America and South America, including the large-scale Morenci minerals district in Arizona and the Cerro Verde operation in Peru. It derives key revenue from the sale of Copper.

$50.30
-0.29[-0.57%]
Last update: 7:58PM (Delayed 15-Minutes)
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Open51.905Close49.470
Vol / Avg.19.984M / 13.866MMkt Cap72.151B
Day Range49.330 - 52.42052 Wk Range32.825 - 52.030

Ternium (NYSE:TX)

Ternium SA is a flat steel producer operating in Mexico, Brazil, Argentina, Colombia, the southern United States, and Central America. It produces finished and semi-finished steel products and iron ore, which are sold either directly to steel manufacturers and steel processors or end-users. The company operates in two segments: Steel and Mining. In its steel segment, the company produces slabs, billets & round bars, hot-rolled coils & sheets, bars & stirrups, wire rods, steel pipes, and other products. The Mining segment sells iron ore as concentrates (fines) and pellets. The vast majority of its revenue comes from the steel segment. Its geographical segments are Mexico, the Southern region, and Brazil & Other markets.

$42.60
-0.60[-1.39%]
Last update: 5:57PM (Delayed 15-Minutes)
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Open43.510Close42.600
Vol / Avg.333.239K / 170.927KMkt Cap8.363B
Day Range42.340 - 43.95052 Wk Range35.220 - 45.575

LyondellBasell Industries (NYSE:LYB)

LyondellBasell Industries NV is a petrochemical producer with operations in the U.S. and Europe. It operates in six segments: Olefins and Polyolefins-Americas (O&P-Americas), Olefins and Polyolefins-Europe, Asia, International (O&P-EAI), Intermediates and Derivatives (I&D), Advanced Polymer Solutions (APS), Refining and Technology. The company is a major producer of polyethylene, the world’s largest producer of polypropylene, and the second- largest producer of propylene oxide. Its chemicals are used in various consumer and industrial end products. Substantially, all of the company’s revenue is derived from product sales.

$101.53
-1.38[-1.34%]
Last update: 4:20PM (Delayed 15-Minutes)
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Open102.590Close101.530
Vol / Avg.1.428M / 2.008MMkt Cap33.042B
Day Range101.225 - 103.35052 Wk Range84.800 - 106.690

Air Products & Chemicals (NYSE:APD)

Founded in 1940, Air Products has grown to be a world-leading industrial gases company and leading supplier of liquefied natural gas process equipment and technology. With operations in 50 countries and more than 17,000 employees, the company serves over 30 industries including metals, chemicals, refining, manufacturing, electronics and food and beverage. It runs over 750 production facilities and approximately 1,800 miles of industrial gas pipeline.

Air Products ended fiscal 2019 with $8.9 billion in sales — the U.S. and Canada accounted for 41% — and a net income of $1.9 billion. It also reported $7.94 diluted earnings per share, an increase from $6.59 in 2018.

$231.53
-4.72[-2.00%]
Last update: 4:20PM (Delayed 15-Minutes)
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Open234.320Close231.530
Vol / Avg.1.520M / 1.844MMkt Cap51.469B
Day Range230.680 - 235.37052 Wk Range212.240 - 307.710

Newmont (NYSE:NEM)

Newmont is the world’s dominant gold company, producer of silver, copper, lead and zinc and the only gold producer listed in the S&P 500 index. Its collection of talent, prospects and assets is secured in favorable mining territories in Australia, Africa, South America and North America. In 2019, Newmont ranked Top Miner on CR Magazine’s 100 best corporate citizens list as well as Top Gold miner on DJSI for ESG performance for the 5th consecutive year.

The gold company reported $9.7 billion in sales and $3.91 diluted earnings per share in fiscal 2019. It also generated $2.9 billion net income from continued operations and $1.4 billion in free cash flow. Newmont was able to pay down over $1.2 billion of debt, refinance more than $600 million at the lowest rate in mining and metals history and return $1.4 billion to shareholders through share repurchases and dividends. Over the next 5 years, the company expects to deliver nearly 8 million gold equivalent ounces per year — the most of any gold company.

$38.70
-0.37[-0.95%]
Last update: 7:59PM (Delayed 15-Minutes)
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Open40.200Close38.640
Vol / Avg.24.342M / 14.190MMkt Cap44.613B
Day Range38.305 - 41.30052 Wk Range29.420 - 51.458

Materials stocks are essential to the metabolism of society because this sector is responsible for producing the raw materials used by all other sectors of the stock market.  That's why it's important to stay on top of the best basic materials stock.

The Trump administration’s policies skew the pitch in favor of domestic producers so this class of stocks has sparked interest among most investors. You can diversify your portfolio and add to your financial growth by trading these 5 select basic materials stocks that could outperform their earnings estimate.

Quick Look at the Best Basic Materials Stock:

Overview: Basic Materials Stock

The best basic materials stock represent companies dealing with the discovery, development and processing of raw materials. This includes companies that make or process construction materials, chemicals, paper, glass, packaging products and forest products as well as minerals, metals and mining companies.

All stocks across this sector are very sensitive to the world economy. The sector tends to perform strongly at the beginning of an economic recovery. The companies may also weaken as the business cycle makes a transition from sharp recovery to stable expansion. Cyclical in its movements, investors often ignore this sector because it’s small or not ideal for their investing style. Basic materials make up the smallest sector exposure in the S&P 500’s 11 industrial segments — it weighs just over 2%.   

For most commodities, the supply of basic materials is in geographical areas of marginal economic development and political uncertainty. As a result, the harvesting of natural resources like metals, coal and timber lends the sector greater exposure to 3rd world countries.

Best Online Brokers for Basic Materials Stocks

To start trading basic materials stocks, you’ll need to open a brokerage account with a discount or full-service broker. An online broker can help you identify the best basic materials stocks as well as provide the platform and tools to trade. Any of the online brokers on this list can help you on your investment journey.

Features to Look for in Basic Materials Stocks

  • Earnings growth is an important screening criterion when choosing a company to invest in. When you own stock, you take part in the growth of the underlying company, as measured by the earnings per share (EPS) growth. The earnings growth can be measured over various time frames, like year-over-year or a 5-year average. Filter out stocks with negative or declining earnings growth. A positive EPS indicates profitability.
  • Debt-equity ratio primarily measures a company’s financial strength. It’s the percentage of a company’s total capitalization owed to others versus the shareholders’ equity. A lower debt-equity ratio is better. As a reasonable rule of thumb, consider companies that have a debt-equity ratio less than 50%.
  • The position in the economic cycle also affects the demand for basic materials. Basic materials stocks suffer when the economy weakens and thrive when market conditions are on the upswing. Choose your entry point wisely. 

Trade Basic Materials Stocks

The best basic materials stock sector has been susceptible to changes in the global economy. Even as revenue and earnings drop, it’s difficult to resist buying top stocks when prices plummet. Investing in the materials sector might seem like a bad idea at the moment, but an economic rebound triggers demand, the 5 stocks we highlighted will see a boom. Basic materials is a cyclical sector — be sure to do your homework before putting your money there. Don’t risk it all until there’s more clarity to the economy. 

Q

What is the materials sector?

A

The materials sector includes companies that help discover, process, and sell materials to other sectors.

 

 

Q

What are the four types of materials?

A

The four types of materials are ceramics, composites, metals, and polyers.

 

 

Q

What are material shares?

A

Material shares are shares in compamioes that produce the materials that are used by other sectors.