In this article, we discuss the 10 best nickel stocks to buy now.
The demand for nickel has been rising in the past few years as it becomes important to the electric vehicle industry. Nickel, previously used as a corrosion resistant material by the steel industry, has exploded in value with the mass production of cheap electronic devices, most of which make use of the metal in manufacturing. According to Research and Markets, the global production of the metal is expected to cross 2.76 million tons within the next two years. This represents a compound annual growth rate of close to 3% for the nickel industry.
A few mining companies poised to use the high demand for the precious metal to their advantage in the near future include Vale S.A. (NYSE: VALE), the Brazilian mining firm, BHP Group (NYSE: BHP), the Australian global resources company, and Rio Tinto Group (NYSE: RIO), the United Kingdom-based multinational metals corporation. On April 26, Vale S.A. (NYSE: VALE) posted earnings per share of $1.09 for the first quarter of 2021, beating market predictions by $0.06. The company is also considering a spinoff of its base metals division.
Meanwhile, BHP Group (NYSE: BHP) has also been enjoying a stellar start to the new year. On May 18, CEO Mike Henry spoke at a mining conference and said that the future outlook for commodities was compelling as the COVID-19 stimulus packages of the government helped lift the demand for raw materials for an extended period of time. Henry also outlined that the industry was evolving to the advantage of BHP, which had close to 25% of its mining portfolio in futuristic commodities like nickel and copper.
Rio Tinto Group (NYSE: RIO), the second-largest mining firm in the world, has also been adapting to changes in the mining sector by engaging in projects that make the firm more environmentally stable in the long-term. As one of the largest nickel producers, the company feels it has a responsibility to the clean energy industry to develop a sustainable market ecosystem. In this regard, the firm has recently pledged to stop using hydrogen in aluminum refining in order to cut down on emissions.
The demand for nickel has been a source of disruption in the mining industry that is usually reliant on other precious metals for revenue. Larger market forces have been reshaping entire industries in the past few years. The entire hedge fund industry is feeling the reverberations of the changing financial landscape. Its reputation has been tarnished in the last decade, during which its hedged returns couldn’t keep up with the unhedged returns of the market indices. On the other hand, 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 124 percentage points since March 2017. Between March 2017 and February 26th 2021 our monthly newsletter’s stock picks returned 197.2%, vs. 72.4% for the SPY. Our stock picks outperformed the market by more than 124 percentage points (see the details here). We were also able to identify in advance a select group of hedge fund holdings that significantly underperformed the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 16th. 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.
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With this context in mind, here is our list of the 10 best nickel stocks to buy now. These were selected keeping in mind their relevance to the nickel industry, hedge fund sentiment, and the business fundamentals driving the earnings of each company.
Best Nickel Stocks to Buy Now
10. PolyMet Mining Corp. (NYSE: PLM)
Number of Hedge Fund Holders: N/A
PolyMet Mining Corp. (NYSE: PLM) is a mining company with interests in copper, nickel, cobalt, gold, silver, and platinum, among other metals. It is placed tenth on our list of 10 best nickel stocks to buy now. The stock has offered investors returns exceeding 29% over the course of the past four weeks. One of the top projects of the firm is the NorthMet, a polymetallic project located in Minnesota and covering an area of more than 4,000 hectares. Copper-nickel mines are part of the natural resource project.
In February, PolyMet Mining Corp. (NYSE: PLM) stock jumped to a six-month high, climbing 16% in a single day as the top court in Minnesota ruled in favor of the firm in a case involving a clean air permit issued to the firm by the pollution agency of the state.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in PolyMet Mining Corp. (NYSE: PLM) with 304,746 shares worth more than $963,000.
Just like Vale S.A. (NYSE: VALE), BHP Group (NYSE: BHP), and Rio Tinto Group (NYSE: RIO), PolyMet Mining Corp. (NYSE: PLM) is one of the best nickel stocks to buy now.
9. Haynes International, Inc. (NASDAQ: HAYN)
Number of Hedge Fund Holders: 11
Haynes International, Inc. (NASDAQ: HAYN) is a company that makes and sells nickel and cobalt-based alloys. These are corrosion resistant and are used in jet engines, gas turbines, and industrial heating equipment, among other places. The firm is ranked ninth on our list of 10 best nickel stocks to buy now. The company’s shares have returned 60% to investors over the course of the past year. Haynes has a market capitalization of just under $500 million and posted over $380 million in revenue last year.
Haynes International, Inc. (NASDAQ: HAYN) is one of the best options on the market when it comes to dividend payments. On April 29, the company declared a quarterly dividend of $0.22 per share, in line with previous. The forward yield was more than 3%.
At the end of the first quarter of 2021, 11 hedge funds in the database of Insider Monkey held stakes worth $56 million in Haynes International, Inc. (NASDAQ: HAYN), down from 13 the preceding quarter worth $42 million.
Just like Vale S.A. (NYSE: VALE), BHP Group (NYSE: BHP), and Rio Tinto Group (NYSE: RIO), Haynes International, Inc. (NASDAQ: HAYN) is one of the best nickel stocks to buy now.
8. Sibanye Stillwater Limited (NYSE: SBSW)
Number of Hedge Fund Holders: 16
Sibanye Stillwater Limited (NYSE: SBSW) is a South African mining company that focuses on precious metals. The company produces gold, nickel, copper, chrome, and other metals. The firm has mining interests in Africa and South America. The company has seen profits soar in recent weeks as the prices of basic materials rise and demand for nickel, used in premier electronic products, rises. It is placed eighth on our list of 10 best nickel stocks to buy now. The stock has returned 106% to investors over the past twelve months..
On June 1, Sibanye Stillwater Limited (NYSE: SBSW) stock soared by close to 7% after the company announced a share buyback program to repurchase 5% of ordinary stock till April next year, affirming that the buyback would not impact dividend payments for shareholders.
Out of the hedge funds being tracked by Insider Monkey, Connecticut-based investment firm AQR Capital Management is a leading shareholder in Sibanye Stillwater Limited (NYSE: SBSW) with 5.2 million shares worth more than $93 million.
Just like Vale S.A. (NYSE: VALE), BHP Group (NYSE: BHP), and Rio Tinto Group (NYSE: RIO), Sibanye Stillwater Limited (NYSE: SBSW) is one of the best nickel stocks to buy now.
In its Q1 2021 investor letter, Desert Lion Capital, an asset management firm, highlighted a few stocks and Sibanye Stillwater Limited (NYSE: SBSW) was one of them. Here is what the fund said:
“Sibanye is a South African gold and platinum group metals (“PGM”) producer with mines in South Africa and the U.S. Established in 2012, it has since become one of South Africa’s largest gold producers and the largest PGM producer in the world. Sibanye also operate a PGM recycling facility and own a majority interest in DRDGOLD, a specialist in the recovery of gold and other precious metals from open pit tailings.
The investment thesis incorporates the following logic:
If central banks globally are going to continue printing money unabated, precious metals prices should rise.
The drive for cleaner and greener is accelerating. The market for platinum, palladium and rhodium is structurally attractive.
The company is generally mischaracterized. Ask around, and one will find that most people still refer to Sibanye as “a South African gold miner” with “lots of debt from that Stillwater acquisition.”
It is not quick and easy to ramp up PGM supply in response to higher demand and prices. Favorable supply-demand characteristics will likely remain favorable for longer.
Bad capital allocation decisions, corporate excesses, and resultant tarnished reputations from the previous boom period are still fresh in the minds of most mining executives. Neal Froneman has proven himself a disciplined capital allocator. His approach to capital allocation is straightforward: deploy capital at expected returns that enhances value to shareholders or distribute it via dividends and buybacks.
The company is debt-free and generating heaps of cash.
The valuation is cheap. At current metal prices, Sibanye is trading at about 5 times after-tax cash profits.
Sibanye is effectively a call option on a potential commodity super cycle. In the meantime, the value of our “option” is unlikely to deteriorate as we are rewarded with healthy dividend flows.”
7. Materion Corporation (NYSE: MTRN)
Number of Hedge Fund Holders: 17
Materion Corporation (NYSE: MTRN) is ranked seventh on our list of 10 best nickel stocks to buy now. The company’s shares have returned 36% to investors over the past year. The firm makes and sells advanced engineering materials. These are used in making semiconductors, as well as in products used by the aerospace and defense industries. The company is famous for the production of copper and nickel in a variety of forms, including plate, bar, wire, rod, and others.
On April 29, Materion Corporation (NYSE: MTRN) posted earnings for the first quarter of 2021, reporting earnings per share of $0.82, beating market predictions by $0.22. The revenue for the first three months of 2021 was $354 million, up more than 27% year-on-year.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm Renaissance Technologies is a leading shareholder in Materion Corporation (NYSE: MTRN) with 421,511 shares worth more than $27 million.
Just like Vale S.A. (NYSE: VALE), BHP Group (NYSE: BHP), and Rio Tinto Group (NYSE: RIO), Materion Corporation (NYSE: MTRN) is one of the best nickel stocks to buy now.
6. Mechel PAO (NYSE: MTL)
Number of Hedge Fund Holders: 3
Mechel PAO (NYSE: MTL) is a Russian mining company that has stakes in the power and steel businesses as well. It is placed sixth on our list of 10 best nickel stocks to buy now. The stock has returned 20% to investors over the past twelve months. The company is one of the top suppliers of nickel to the Russian government through the Southern Urals Nickel Plant. This nickel is used for defense needs when countries in the West refuse to export nickel to the Russian Federation.
In quarterly earnings results, posted on May 20, Mechel PAO (NYSE: MTL) reported a revenue of RUB76 billion for the first quarter of 2021, up close to 13% compared to the revenue for the first three months of last year.
At the end of the first quarter of 2021, 3 hedge funds in the database of Insider Monkey held stakes worth $3 million in Mechel PAO (NYSE: MTL), down from 4 in the previous quarter worth $2.8 million.
Just like Vale S.A. (NYSE: VALE), BHP Group (NYSE: BHP), and Rio Tinto Group (NYSE: RIO), Mechel PAO (NYSE: MTL) is one of the best nickel stocks to buy now.
5. Allegheny Technologies Incorporated (NYSE: ATI)
Number of Hedge Fund Holders: 20
Allegheny Technologies Incorporated (NYSE: ATI) is a company that markets specialty metals and related products. The firm makes and sells cobalt and nickel-based alloys, among a host of other materials and components related to metals. The company supplies these products to more than 30 countries around the world. It is ranked fifth on our list of 10 best nickel stocks to buy now. The company’s shares have offered investors returns exceeding 135% over the past twelve months..
On April 29, Allegheny Technologies Incorporated (NYSE: ATI) posted earnings results for the first quarter of 2021, reporting a revenue of close to $700 million, down 27% year-on-year but beating market expectations by almost $44 million.
Out of the hedge funds being tracked by Insider Monkey, New York-based investment firm DE Shaw is a leading shareholder in Allegheny Technologies Incorporated (NYSE: ATI) with 3.8 million shares worth more than $80 million.
4. Schnitzer Steel Industries, Inc. (NASDAQ: SCHN)
Number of Hedge Fund Holders: 12
Schnitzer Steel Industries, Inc. (NASDAQ: SCHN) is a company that recycles various types of metals and markets finished metal products as well. It is placed fourth on our list of 10 best nickel stocks to buy now. The stock has returned 189% to investors in the past year. The company has gained importance in recent years as electric vehicles, which use nickel in EV batteries, gain traction. The firm is developing methods for the safe storage, collection, and sale of nickel for the EV industry through its recycling program.
Schnitzer Steel Industries, Inc. (NASDAQ: SCHN) stock is a good option for income investors who want steady payments on the side. On April 7, the firm declared a quarterly dividend of $0.1875 per share, in line with previous. The forward yield was 1.81%.
At the end of the first quarter of 2021, 12 hedge funds in the database of Insider Monkey held stakes worth $15.3 million in Schnitzer Steel Industries, Inc. (NASDAQ: SCHN), up from 9 in the preceding quarter worth $19.9 million.
3. Rio Tinto Group (NYSE: RIO)
Number of Hedge Fund Holders: 25
Rio Tinto Group (NYSE: RIO) is ranked third on our list of 10 best nickel stocks to buy now. The company’s shares have returned 50% to investors in the past twelve months. It is one of the largest mining firms in the world and has significant interests in the nickel industry. The company has partnered with another mining firm, Bluejay, to explore for nickel in Finland as nickel demand rises in tandem with the mainstreaming of electric vehicles around the globe.
In August last year, Rio Tinto Group (NYSE: RIO) initiated legal proceedings against an Australian construction engineering firm over a fire at an iron ore processing facility that Rio claims hit abilities to process the ore, even during repairs.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Rio Tinto Group (NYSE: RIO) with 12.5 million shares worth more than $971 million.
2. BHP Group (NYSE: BHP)
Number of Hedge Fund Holders: 18
BHP Group (NYSE: BHP) is a natural resources company that engages in the mining and production of metals such as gold, silver, copper, zinc, and nickel. The company also smelts and refines nickel. The firm uses nickel sulphide and laterite ore to make nickel. It is placed second on our list of 10 best nickel stocks to buy now. The stock has returned 48% to investors in the past twelve months. The mining firm has a market cap of more than $161 billion and posted close to $43 billion in revenue last year.
On June 16, news agency Reuters reported that mining firm Samarco had announced that it was expecting a debtor-in-possession loan worth $238 million from BHP Group (NYSE: BHP) and another big mining firm to maintain operations. BHP is a controlling shareholder in Samarco.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in BHP Group (NYSE: BHP) with 7.9 million shares worth more than $553 million.
1. Vale S.A. (NYSE: VALE)
Number of Hedge Fund Holders: 31
Vale S.A. (NYSE: VALE) is the largest nickel producer in the world. It is ranked first on our list of 10 best nickel stocks to buy now. The company’s shares have returned 120% to investors in the past twelve months. The company has projected that nickel will be a mainstay in the EV battery industry over the coming years and as the largest nickel producer in the world, it is uniquely placed to take advantage of the upcoming boom.
Vale S.A. (NYSE: VALE) is one of the mining stocks that investors should watch as China releases metal from national reserves in the open market in a move aimed at controlling surging commodity prices, potentially impacting the high prices of basic materials in the process.
Out of the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Vale S.A. (NYSE: VALE) with 38 million shares worth more than $661 million.
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Disclose. None. 10 Best Nickel Stocks to Buy Now is originally published on Insider Monkey.
