In this article, we discuss the 10 best mineral stocks to buy now.
The mining industry has shown resilience amid the pandemic. As per PwC, the top 40 mining companies in the world had combined revenue of $544.4 billion in 2020, up 4.4% from 2019. Additionally, the mining industry continues to profit from the rebounding economic activities globally. This is due to the increase in demand for commodities. For example, the recent passage of a $1.2 trillion infrastructure bill caused mining stock prices to skyrocket in early November. Among the biggest mining stocks in the market include Freeport-McMoRan Inc. (NYSE:FCX), Cleveland-Cliffs Inc. (NYSE:CLF), and Alcoa Corporation (NYSE:AA).
The outlook for mining commodities has improved since the introduction of the COVID-19 vaccine. One of the raw materials that rallied in the recent months is iron ore. Between April 2020 and May 2021, iron ore prices rose from $80/t to a high of $233/t, according to consultancy firm McGrathNicol. Yet, iron ore prices dropped to as low as $94/t by mid-September as China, the world’s largest importer of iron ore, limits its steel production to 2020 levels. Meanwhile, the S&P Global Market Intelligence forecasted an iron ore price of $110/t in Q4 2021 and $115/t in 2022. Analysts estimate that iron ore producers such as BHP Group (NYSE:BHP) and Rio Tinto Group (NYSE:RIO) would not restrict supply as long as profits remain in the $100/t range.
Meanwhile, in early October, other raw materials such as aluminum, copper, and nickel saw year-to-date gains of 47%, 20%, and 8%, respectively, according to Bloomberg Commodity Spot Index. This is due to the increase in demand for metals used in electric vehicle production.
According to a Research and Market report, the global mining industry was valued at $1.6 trillion in 2020. The mining industry is expected to reach $1.8 trillion in 2021 at a CAGR of 12.4%, fueled by mining companies’ recovery from restricted operations during the pandemic’s peak. The global mining industry is projected to reach $2.4 trillion value by 2025.
Our Methodology
These are the mining stocks with strong mining operations in and outside the US. We included mining stocks that have positive analyst ratings and long-term growth catalysts. We also took into account hedge fund sentiment based on the data of over 873 hedge funds tracked by Insider Monkey.
We ranked the list based on the number of hedge funds having stakes in each firm as of the second quarter.
Why pay attention to hedge fund holdings? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021, our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
Here is our list of the 10 best mining stocks to buy now.
Best Mining Stocks To Buy Now
10. Sibanye Stillwater Limited (NYSE:SBSW)
Number of Hedge Fund Holders: 15
We’ll start our list of best mining stocks to buy with Sibanye Stillwater Limited (NYSE:SBSW), a global precious metal mining company based in South Africa. The mining company is a producer of gold and platinum-group metals.
On October 12, Abhi Agarwal of Deutsche Bank initiated a Buy rating on Sibanye Stillwater Limited with a price target of $19. Agarwal believes Sibanye’s growing mineral portfolio will generate free cash flow in the coming years.
The mining stock jumped 3.5% on October 26 following its acquisition of nickel and copper mines from Appian Capital Advisory. These mines located in Brazil will be purchased by the mining company for $1 billion in cash and a 5% net smelter return royalty.
Of the 873 elite funds tracked by Insider Monkey, 15 were long for Sibanye Stillwater Limited at the end of June, compared to 16 in the first quarter of 2021.
Sibanye Stillwater Limited is one of the best mining stocks according to market analysts, just like Freeport-McMoRan Inc. (NYSE:FCX), Cleveland-Cliffs Inc. (NYSE:CLF), and Alcoa Corporation (NYSE:AA).
9. BHP Group (NYSE:BHP)
Number of Hedge Fund Holders: 18
BHP Group is one of the largest mining companies in the world, with established operations in over 90 countries. The Australian mining company produces iron ore, copper, nickel, coal, potash, and petroleum.
BHP Group was given an Outperform rating by Bernstein and Macquarie alongside price targets of A$45 and A$56, respectively. At the end of the second quarter of 2021, 18 hedge funds in the database of Insider Monkey held stakes worth $753 million in BHP Group.
In its Q1 2021 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and BHP Group (NYSE:BHP) was one of them. Here is what the fund said:
“Our purchase of Australian mining company BHP is an example of a quality company at a moderate valuation that should deliver attractive long-term returns. We believe the market has undervalued its enduring competitive advantage due to its low-cost iron and copper mining operations which has allowed the company to deliver consistent profits and cash flows across the inevitable ups and downs of the global metals cycle. While the variability of commodity prices prevents BHP from scoring in the top ranks of measured quality, we are willing to bear some of that uncertainty in return for a more attractive valuation given the company’s strong business fundamentals.”
8. MP Materials Corp. (NYSE:MP)
Number of Hedge Fund Holders: 20
MP Materials Corp. (NYSE:MP) is a Nevada-based integrated rare earth mining company. MP Materials Corp. (NYSE:MP) mines lanthanum, neodymium and praseodymium, and SEG+. These elements are used in manufacturing EV batteries, medical devices, and lasers.
Year to date, the mining stock gained 50%. MP Materials Corp.’s (NYSE:MP) revenue in the third quarter jumped 143% year over year to $99.7 million, beating estimates by $22.6 million.
On October 26, JPMorgan analyst Tyler Langton maintained an Overweight rating on MP Materials Corp. with a price target of $45 per share.
At the end of the second quarter of 2021, 20 hedge funds in the database of Insider Monkey held stakes worth $2.57 billion in MP Materials Corp..
7. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holders: 21
Rio Tinto Group is one of the world’s biggest mining companies that is based in London, UK. The company engages in mining raw materials including copper, aluminum, iron ore, lithium, and diamonds. The mining behemoth has operations in over 35 countries.
Even though Rio Tinto Group saw a decline in the number of hedge funds having stakes in the company in the second quarter, the stock remains the most popular mining stock among institutional investors. At the end of June, 21 funds out of the 873 tracked by Insider Monkey had stakes in the company, compared to 25 in the previous quarter.
On November 3, Alain Gabriel of Morgan Stanley increased his price target for Rio Tinto Group to 4,880 GPB from GBP 4,750, while maintaining an Equal Weight rating on the shares.
Among the hedge funds being tracked by Insider Monkey, Fisher Asset Management is a leading shareholder in Rio Tinto Group with 13 million shares worth more than $892 million at the end of the September quarter.
6. Cameco Corporation (NYSE:CCJ)
Number of Hedge Fund Holders: 25
Cameco Corporation (NYSE:CCJ) is the world’s largest uranium company. The Canadian mining company is capable of producing more than 53 million pounds of uranium concentrates per year. Additionally, the mining company operates a fuel segment with operations in Asia, Europe, and the Americas.
Shares of Cameco Corporation jumped nearly 8% on November 3 after Bank of America analyst Lawson Winder upgraded the mining stock to Buy from Neutral. Winder also raised his price target for the stock to C$40 from C$36.25. The analyst believes that Cameco would benefit from the growing popularity of nuclear energy in global decarbonization.
Of the 873 elite funds tracked by Insider Monkey, 25 were long for Cameco Corporation at the end of June, compared to 30 in the first quarter of 2021.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm Kopernik Global Investors is a leading shareholder in Cameco Corporation with 8.9 million shares worth more than $195 million at the end of September quarter.
In addition to Freeport-McMoRan Inc. (NYSE:FCX), Cleveland-Cliffs Inc. (NYSE:CLF), and Alcoa Corporation (NYSE:AA), Cameco Corporation is one of the mining stocks favored by analysts and investors as a long-term investment.
5. Agnico Eagle Mines Limited (NYSE:AEM)
Number of Hedge Fund Holders: 29
Agnico Eagle Mines Limited (NYSE:AEM) is a Canadian gold mining company that has established mines in Mexico and Finland. The company also engages in mineral exploration activities in Colombia and the US. Agnico Eagle Mines Limited is one of the best mining stocks to buy now, with payable gold production of 1,736,568 ounces in 2020.
Josh Wolfson of RBC Capital upgraded Agnico Eagle Mines Limited to Outperform from Sector Perform, with a $63 price target on October 6. The analyst sees upside potential for the company including a stronger balance sheet and anticipated milestones such as Detour Lake and Fosterville projects from its merger with Kirkland Lake Gold Ltd. (NYSE:KL).
Of the 873 elite funds tracked by Insider Monkey, 29 were long Agnico Eagle Mines Limited at the end of June, up from 28 in the first quarter of 2021.
Among the hedge funds being tracked by Insider Monkey, New York-based investment firm First Eagle Investment Management is a leading shareholder in Agnico Eagle Mines Limited with 5.24 million shares worth more than $272 million at the end of September quarter.
4. Cleveland-Cliffs Inc. (NYSE:CLF)
Number of Hedge Fund Holders: 44
Cleveland-Cliffs Inc. is the largest iron ore producer in North America following its acquisitions of ArcelorMittal USA and AK Steel in 2020. The company engages iron ore and coal mining and steelmaking in its 46 facilities.
The mining stock gained 5.8% on November 8 after the House of Representatives passed the $1.2 trillion infrastructure bill over the weekend. Shares of Cleveland-Cliffs Inc. rose 53% year to date.
Analyst Gordon Johnson of GLJ Research maintained a Buy rating on Cleveland-Cliffs Inc. and increased his price target for the mining stock to $36.06 from $28.35.
The Ohio-based mining company also saw a considerable increase in hedge fund positions over the last two quarters. Out of the 873 funds in Insider Monkey’s database, 44 held stakes worth $1.11 billion in Cleveland-Cliffs Inc. at the end of the second quarter of 2021, up from 36 in the preceding quarter.
3. Alcoa Corporation (NYSE:AA)
Number of Hedge Fund Holders: 44
Alcoa Corporation is one of the largest global bauxite miners in the world. The Pennsylvania-based company sells its aluminum, alumina, and bauxite products internationally. The company supplies metals to manufacturers in different industries including aerospace and EV. The mining company grew its revenue in the third quarter by 10% to $3.11 billion, beating estimates by $194 million.
Alcoa Corporation recently introduced a technology roadmap to decarbonize the aluminum supply chain. This will also assist the company in meeting its goal of achieving net-zero greenhouse gas emissions across its global operations by 2050. The stock gained 105% year to date.
Jefferies analyst Christopher LaFemina upgraded Alcoa Corporation to Buy from Hold rating on November 2. LaFemina believes that the global decarbonization initiative can help Alcoa grow even more. The analyst raised his price target for the stock to $60 from $52.
Meanwhile, The metal company announced plans to restart 268,000 mt/year of aluminum capacity at the Alumar smelter in São Luís, Brazil, in September. The first molten metal is expected in the second quarter of 2022, with the full capacity of 268,000 mt/year operational in the fourth quarter of 2022.
At the end of the second quarter of 2021, 44 hedge funds in the database of Insider Monkey held stakes worth $1.16 billion in Alcoa Corporation, up from 38 in the previous quarter worth $1 billion.
2. Barrick Gold Corporation (NYSE:GOLD)
Number of Hedge Fund Holders: 47
Barrick Gold Corporation (NYSE:GOLD) is a Canadian gold and copper mining company that has established operations in 13 countries. The company has ownership interests in gold mines in the US, Canada, Tanzania, Argentina, Dominican Republic, and the Democratic Republic of Congo.
On November 10, shares of Barrick Gold Corporation rose 4.6% as gold prices jumped over $40 on the day, with December Comex futures trading at $1,867.50.
Of the 873 elite funds tracked by Insider Monkey, 47 were long Barrick Gold Corporation at the end of June, compared to 49 in the first quarter of 2021. New York-based First Eagle Investment Management is the leading stakeholder of the company at the end of the September quarter.
In the Q2 2021 Investor Letter, Ariel Investments highlighted a few stocks and Barrick Gold Corp is one of them. Here is what the fund said:
“We re-initiated a position in Barrick Gold Corp. (GOLD) in the quarter. Its shares fell -5.56% from our initiation to the end of the quarter as the price of gold trended lower. Gold exceeded $2,000 per ounce in 2020 but has since declined to approximately $1,812 per ounce. Barrick’s shares have often traded at elevated PE multiples. However, at the current reduced stock price, it is trading at a PE multiple of only 16 times next year’s earnings, an attractive opportunity in our opinion, given our expectation of higher inflation and gold’s historic role as an inflationary hedge.”
1. Freeport-McMoRan Inc. (NYSE:FCX)
Number of Hedge Fund Holders: 76
We’ll wrap up our list of the 10 best mining stocks to buy now with Freeport-McMoRan Inc., an Arizona-based mining giant. In the third quarter, Freeport-McMoRan Inc. produced 987 million pounds of metal, making the company the world’s largest copper miner. The mining company has established operations in North America, South America, and Indonesia.
The mining company’s revenue in the third quarter grew 58% year over year to $6.08 billion, owing to higher copper prices and increased production. The stock gained 98% in the previous year.
Argus Research analyst David Coleman increased his price target on Freeport-McMoRan Inc. to $45 from $40 on October 22. Coleman maintained a Buy rating on the stock, believing that the Arizona-based mining company is well-positioned to profit from rising metal prices. The analyst also raised his EPS forecast for 2021 from $2.85 to $2.97.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Freeport-McMoRan Inc. with 46 million shares worth more than $1.53 billion as of the third quarter.
At the end of the second quarter of 2021, 76 hedge funds in the database of Insider Monkey held stakes worth $3.87 billion in Freeport-McMoRan Inc., up from 68 in the previous quarter worth $3.29 billion.
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This article is originally published at Insider Monkey.
