11 Best Commodity Stocks To Buy on the Dip

Published on December 7, 2022 at 8:47 am by Usman Kabir in Hedge Funds, News

In this article, we discuss the 11 best commodity stocks to buy on the dip. If you want to read about some more commodity stocks to buy on the dip, go directly to 5 Best Commodity Stocks To Buy on the Dip.

Over the past year, commodities stocks were trading at record highs due to a macro environment characterized by soaring inflation and rising interest rates. This boom had come after years of stalled prices in the sector that had led economic experts, like Jim Cramer of Mad Money on CNBC, to advise investors at the time to buy the dip in the commodities sector, before a spike in the prices of prominent stocks like Chevron Corporation (NYSE:CVX), Gilead Sciences, Inc. (NASDAQ:GILD), and Philip Morris International Inc. (NYSE:PM).

As new economic data shows that the US is on a path to recovery after two consecutive quarters of stalled growth, and as supply chains improve, resulting in lower-than-expected inflation readings, commodity stocks are witnessing a dip in their share prices once again. However, the market is expected to continue to be volatile due to the Russian war in Ukraine and the uncertain virus situation in China, meaning that any dip is likely to be short-lived and provides a buying opportunity for shrewd investors.

Our Methodology

The companies that operate in the commodities sector were selected for the list. Only firms that have seen their share price decline by more than 10% in the past six months were selected. These stocks are popular among the 920 hedge funds tracked by Insider Monkey and also have long-term growth prospects, as discussed in the article below.

Photo by Francisco Fernandes on Unsplash

Best Commodity Stocks To Buy on the Dip

11. Northern Dynasty Minerals Ltd. (NYSE:NAK)

Number of Hedge Fund Holders: 4

Loss in Share Price Over Past Six Months as of December 6: 16%

Northern Dynasty Minerals Ltd. (NYSE:NAK) engages in the exploration of mineral properties in the United States. On July 27, Northern Dynasty Minerals revealed that it has entered into a royalty agreement for as much as $60 million in proceeds over two years, in return for the right to receive a portion of future gold and silver production from the Pebble Project for the life of the mine. The shares of the company rose 20% after the announcement.

Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm Kopernik Global Investors is a leading shareholder in Northern Dynasty Minerals Ltd. (NYSE:NAK) with 31.9 million shares worth more than $7.8 million.

At the end of the third quarter of 2022, 4 hedge funds in the database of Insider Monkey held stakes worth $7.9 million in Kenon Holdings Ltd. (NYSE:KEN), compared to 5 in the preceding quarter worth $8.6million.

Just like Chevron Corporation (NYSE:CVX), Gilead Sciences, Inc. (NASDAQ:GILD), and Philip Morris International Inc. (NYSE:PM), Northern Dynasty Minerals Ltd. (NYSE:NAK) is one of the best commodity stocks to buy on the dip according to elite hedge funds.

10. Kenon Holdings Ltd. (NYSE:KEN)

Number of Hedge Fund Holders: 4

Loss in Share Price Over Past Six Months as of December 6: 39%

Kenon Holdings Ltd. (NYSE:KEN) operates as an owner, developer, and operator of power generation facilities in Israel, the United States, and internationally. On November 30, Kenon Holdings declared a semi-annual dividend of $3.50 per share. The forward yield was 15.38%. On November 30, Kenon posted earnings for the third quarter of 2022, reporting earnings per share of $4.65. The revenue over the period was $163 million, up 22.6% compared to the revenue over the same period last year.

At the end of the third quarter of 2022, 4 hedge funds in the database of Insider Monkey held stakes worth $8 million in Kenon Holdings Ltd. (NYSE:KEN), compared to 3 in the preceding quarter worth $6.5 million.

Among the hedge funds being tracked by Insider Monkey, Boston-based investment firm Arrowstreet Capital is a leading shareholder in Kenon Holdings Ltd. (NYSE:KEN) with 142,896 shares worth more than $4.9 million.

9. Intrepid Potash, Inc. (NYSE:IPI)

Number of Hedge Fund Holders: 8

Loss in Share Price Over Past Six Months as of December 6: 45%

Intrepid Potash, Inc. (NYSE:IPI) engages in the extraction and production of potash in the United States and internationally. On November 2, Intrepid Potash posted earnings for the third quarter of 2022, reporting earnings per share of $0.97. The revenue over the period was $74.8 million, up 26.5% compared to the revenue over the same period last year.

At the end of the third quarter of 2022, 8 hedge funds in the database of Insider Monkey held stakes worth $26.5 million in Intrepid Potash, Inc. (NYSE:IPI), compared to 10 in the preceding quarter worth $34.8 million.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Two Sigma Advisors is a leading shareholder in Intrepid Potash, Inc. (NYSE:IPI) with 224,410 shares worth more than $8.8 million.

8. Perpetua Resources Corp. (NASDAQ:PPTA)

Number of Hedge Fund Holders: 8

Loss in Share Price Over Past Six Months as of December 6: 31%

Perpetua Resources Corp. (NASDAQ:PPTA) engages in mineral exploration activities in the United States. On November 14, Perpetua Resources posted earnings for the third quarter of 2022, reporting losses per share of $0.09, missing market estimates by $0.01. As of October 31, 2022, Perpetua Resources had cash and cash equivalents totaling approximately $27.6 million.

On October 25, B. Riley analyst Lucas Pipes maintained a Buy rating on Perpetua Resources Corp. (NASDAQ:PPTA) stock and lowered the price target to $15 from $22, noting that precious metals are still facing short- to medium-term headwinds from the falling currency and rising interest rates.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm Paulson & Co is a leading shareholder in Perpetua Resources Corp. (NASDAQ:PPTA) with 24.8 million shares worth more than $50 million.

At the end of the third quarter of 2022, 8 hedge funds in the database of Insider Monkey held stakes worth $72 million in Perpetua Resources Corp. (NASDAQ:PPTA), compared to 10 in the preceding quarter worth $124 million.

7. Vale S.A. (NYSE:VALE)

Number of Hedge Fund Holders: 27

Loss in Share Price Over Past Six Months as of December 6: 11%

Vale S.A. (NYSE:VALE) produces and sells iron ore and iron ore pellets for use as raw materials in steelmaking in Brazil and internationally. On November 17, Vale declared that it signed a long-term agreement with General Motors, an American multinational automotive manufacturing company, to supply battery-grade nickel sulfate from its proposed plant at Becancour, Quebec, securing supply in support of General Motors’ fast-growing electric vehicle production needs in North America. In a slowing economy, the dividend yield of the firm, which is over 10%, looks enticing, even in the backdrop of dropping iron prices and a slowing global economy.

On November 23, Deutsche Bank analyst Liam Fitzpatrick upgraded Vale S.A. (NYSE:VALE) stock to Buy from Hold with a price target of $20, up from $19, noting that with sector-leading shareholder returns, medium-term growth optionality and low reinvestment, there is an opportunity to buy the shares considering the 30% pullback from the year-to-date high.

At the end of the third quarter of 2022, 27 hedge funds in the database of Insider Monkey held stakes worth $1.4 billion in Vale S.A. (NYSE:VALE), compared to 27 in the preceding quarter worth $1.8 billion.

Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Vale S.A. (NYSE:VALE) with 21 million shares worth more than $285 million.

6. Barrick Gold Corporation (NYSE:GOLD)

Number of Hedge Fund Holders: 35

Loss in Share Price Over Past Six Months as of December 6: 20%

Barrick Gold Corporation (NYSE:GOLD) engages in the exploration, mine development, production, and sale of gold and copper properties. On November 3, Barrick Gold posted earnings for the third quarter of 2022, reporting earnings per share of $0.13, beating market estimates by $0.02. The revenue over the period was $2.53 billion, down 10.3% compared to the revenue over the same period last year and beating market estimates by $60 million.

On November 21, RBC Capital analyst Josh Wolfson maintained an Outperform rating on Barrick Gold Corporation (NYSE:GOLD) stock and lowered the price target to $20 from $27, highlighting that the company’s updated 5-year forecasts reflect higher operating costs in line with recent industry inflationary pressures, as well as significantly higher interim capital spending.

At the end of the third quarter of 2022, 35 hedge funds in the database of Insider Monkey held stakes worth $777.7 million in Barrick Gold Corporation (NYSE:GOLD), compared to 40 in the preceding quarter worth $1.1 billion.

Among the hedge funds being tracked by Insider Monkey, New York-based investment firm First Eagle Investment Management is a leading shareholder in Barrick Gold Corporation (NYSE:GOLD) with 42 million shares worth more than $664 million.

In addition to Chevron Corporation (NYSE:CVX), Gilead Sciences, Inc. (NASDAQ:GILD), and Philip Morris International Inc. (NYSE:PM), Barrick Gold Corporation (NYSE:GOLD) is one of the best commodity stocks to buy on the dip according to elite hedge funds.

In its Q1 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and Barrick Gold Corporation (NYSE:GOLD) was one of them. Here is what the fund said:

“Also within the structural bucket, we have selectively added to our commodity exposure with the purchase of Barrick Gold (NYSE:GOLD). Canadian mining company Barrick Gold is a play on operating improvements. The company has aggressively delivered its balance sheet and reduced CAPEX spending to a lower level more permanently, directing its healthy free cash flow to dividends and buybacks.”

Click to continue reading and see 5 Best Commodity Stocks To Buy on the Dip.

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Published on April 1, 2024 at by Insider Monkey Staff

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