In this article, we will look at the 11 best commodity stocks to invest in.
The coronavirus pandemic caused massive supply chain disruption across the globe as it spread, which resulted in higher volatility in commodities. The pandemic has had a dramatic impact on commodity prices since it broke out. It was responsible for record highs for gold, and record lows for oil. However, according to the World Economic Forum, almost all commodity prices had recovered by the end of the third quarter of 2020.
As we moved into 2021, the world began to move towards recovery as governments got equipped with vaccines and initiated mass rollouts. As business began to open up, the demand for raw materials began to rise which resulted in commodity prices sky-rocketing.
Some of the most popular commodity stocks among hedge funds include Alcoa Corporation (NYSE:AA), Barrick Gold Corporation (NYSE:GOLD), and Freeport-McMoRan Inc. (NYSE:FCX).
Our Methodology
To pick the 11 best commodity stocks to invest in, we consulted Insider Monkey’s database which tracks 867 elite hedge funds. We picked the stocks that were most popular among investor circles and that had a positive hedge fund sentiment. We also included the analyst ratings along with each stock. We believe that analyst ratings and hedge fund sentiment are important to gauge the performance of a given stock. With this context in mind, let’s take a look at the 11 best commodity stocks to invest in.
11 Best Commodity Stocks To Invest In
11. BHP Group (NYSE:BHP)
Number of Hedge Fund Holders: 18
BHP Group (NYSE:BHP) operates as a natural resources organization and serves in Australia, Europe, China, Japan, India, South Korea, the rest of Asia, North America, South America, and internationally. It operates through the following segments: Petroleum, Copper, Iron Ore, and Coal segments. BHP Group (NYSE:BHP) was founded in 1851 and is headquartered in Melbourne, Australia.
On February 3, 2022, Jefferies analyst Christopher LaFemina raised his price target on BHP Group (NYSE:BHP) to $64 from $60 and reiterated a Hold rating on the shares.
By the end of the third quarter of 2021, 18 hedge funds had a stake in BHP Group (NYSE:BHP). The total value of these stakes was $899.8 million, up from $752.9 million in the second quarter with 18 positions.
As of February 14, 2022, Ken Fisher of Fisher Asset Management is the top shareholder in the company. According to the third-quarter filings, Mr. Fisher owns over 7.8 million shares of BHP Group (NYSE:BHP), which amount to a stake of $470.8 million.
Like Alcoa Corporation (NYSE:AA), Barrick Gold Corporation (NYSE:GOLD), and Freeport-McMoRan Inc. (NYSE:FCX), BHP Group (NYSE:BHP) is one of the 11 best commodity stocks to invest in.
10. SunCoke Energy, Inc (NYSE:SXC)
Number of Hedge Fund Holders: 19
SunCoke Energy, Inc (NYSE:SXC) operates as an independent producer of coke in the Americas and Brazil. The company operates through three segments: Domestic Coke, Brazil Coke, and Logistics. It offers metallurgical and thermal coal. SunCoke Energy, Inc (NYSE:SXC) was founded in 1960 and is headquartered in Lisle, Illinois.
On February 2, 2022, B. Riley analyst Lucas Pipes raised the firm’s price target on SunCoke Energy to $11 from $10 and keeps a Buy rating.
By the end of the third quarter of 2021 19 hedge funds, out of the elite 867 funds tracked by Insider Monkey, held stakes in SunCoke Energy, Inc. The total value of these stakes was in excess of $69.28 million. Jim Simons of Renaissance Technologies was the largest stakeholder. As of September 30th, Renaissance Technologies owned over 3 million shares of stock, which were worth $19.67 million.
9. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holders: 20
Rio Tinto Group (NYSE:RIO) is involved in the exploration, mining, and processing of mineral resources worldwide. The company offers aluminum, copper, diamonds, gold, borates, titanium dioxide, salt, iron ore, and uranium. On November 17, 2021, Rio Tinto Group (NYSE:RIO) announced its plans about investing $87 million at its smelter in Canada to increase low-carbon aluminum production. The investment will get 16 new smelting cells at its AP60 smelter. The company predicts that this initiative will increase production at the smelter by 45%. This plan is set to be operational by the spring of 2022 and is expected to be wound up by the fourth quarter of 2023. Rio Tinto Group (NYSE:RIO) was founded in 1873 and is headquartered in London, the United Kingdom.
Insider Monkey’s data shows that by the end of the third quarter of 2021, 20 hedge funds had stakes in Rio Tinto Group (NYSE:RIO) amounting to $1.33 billion. Of these funds, Fisher Asset Management held the most shares of stock. As of February 14, 2022. Fisher Asset Management’s stake in the company exceeds $907.2 million, which accounts for 0.5% of their 13F portfolio.
Rio Tinto Group (NYSE:RIO), along with Alcoa Corporation (NYSE:AA), Barrick Gold Corporation (NYSE:GOLD), and Freeport-McMoRan Inc. (NYSE:FCX), is getting the attention of hedge funds and analysts in 2022.
8. Southern Copper Corporation (NYSE:SCCO)
Number of Hedge Fund Holders: 23
Southern Copper Corporation (NYSE:SCCO) is involved in the mining, exploration, smelting, and refining of copper and other minerals businesses. Southern Copper Corporation (NYSE:SCCO) was founded in 1952 in Arizona and serves in Peru, Mexico, Argentina, Ecuador, and Chile.
Last December, Morgan Stanley analyst Carlos De Alba upgraded Southern Copper Corporation (NYSE:SCCO) to Equal Weight from Underweight and gave the stock a $55 price target.
Ken Fisher, the manager of Fisher Asset Management, owns the most shares of Southern Copper Corporation (NYSE:SCCO) as of February 14, 2022. Mr. Fisher’s stake in the company, through his hedge fund, is a hefty $221.8 million, which covers 0.12% of his 13F portfolio. Apart from Fisher Asset Management, the stock is present in 22 other portfolios as of the third quarter of 2021, and the total stake investors have in the company exceeds $403.4 million.
7. Vale SA (NYSE:VALE)
Number of Hedge Fund Holders: 27
Vale SA (NYSE:VALE) is involved in the production and selling of iron ore and iron ore pellets for use as raw materials in steelmaking. The company has operations all across the globe. It company operates through the following segments: Ferrous Minerals, Base Metals, and Coal. Vale SA (NYSE:VALE) was founded in 1942 and is headquartered in Rio de Janeiro, Brazil.
This February, Jefferies analyst Christopher LaFemina raised his price target on Vale SA(NYSE:VALE) to $16 from $13 and kept a Hold rating.
As of this February, Fisher Asset Management is the primary stakeholder in the company. The fund’s stake in Vale SA (NYSE:VALE) is roughly $434.32 million. The investment covers 0.24% of Fisher Asset Management’s 13F portfolio.
We, at Insider Monkey, track data for 867 hedge funds. Of these 867 funds, 27 held stakes in Vale SA (NYSE:VALE) by the end of the third quarter of 2021. The total value of these stakes was over $1.97 billion.
Miller Value Partners, an investment management firm, published its “Miller Income Strategy” third quarter 2021 investor letter, in which the firm mentioned Vale SA (NYSE:VALE). Here’s what Miller Value Partners had to say:
“Vale (VALE) was the top detractor over the quarter, falling 32.6% in sympathy with iron ore’s 48% decline from record highs on China capacity curbs and growing fears of financial issues within the property sector. Vale SA (NYSE:VALE) reported Q2 EBITDA of $11.24Bn, slightly below consensus of $11.47Bn on higher than expected iron ore cash costs. Free cash flow of $6.5Bn (35% annualized yield) came in well ahead of expectations, driving $2.6Bn of stock buybacks and a 1H21 dividend of $7.6Bn, implying year-to-date (YTD) shareholder returns of roughly $13.8Bn (19% of the current market cap). Management maintained FY21 production guidance for iron ore of 315-335 Metric tons (Mt) and lowered year-end 2022 exit capacity to 370Mt (from 400Mt) due to Northern System licensing delays. Additionally, the company hosted their annual Investor Day, outlining new production initiatives aimed at becoming a key supplier to steelmakers in light of decarbonization goals.”
6. LyondellBasell Industries NV (NYSE:LYB)
Number of Hedge Fund Holders: 39
LyondellBasell Industries NV (NYSE:LYB) operates as a chemical company in the United States, Germany, Mexico, Italy, Poland, France, Japan, China, the Netherlands, and internationally. The company was founded in 1955 and is headquartered in Houston, Texas.
Insider Monkey was able to identify 39 hedge funds that held stakes in LyondellBasell Industries NV (NYSE:LYB) by the end of the third quarter of 2021. The total value of these stakes was $676.59 million. Of these funds, the top stakeholder was Eagle Capital Management, having owned over 3.22 million shares as of September 30th. As of this February, the stake of the fund LyondellBasell Industries NV (NYSE:LYB) is more than $281.68 million, and the investment accounts for 0.84% of Eagle Capital Management’s 13F portfolio.
This February, BMO Capital analyst John McNulty raised his price target on LyondellBasell Industries NV (NYSE:LYB) to $103 from $95 and reiterated a Market Perform rating on the stock.
5. Cleveland-Cliffs Inc (NYSE:CLF)
Number of Hedge Fund Holders: 35
Cleveland-Cliffs Inc. (NYSE:CLF) operates as a flat-rolled steel producer in North America. It also manufactures iron ore pellets. Cleveland-Cliffs Inc. (NYSE:CLF) was founded in 1847 and is headquartered in Cleveland, Ohio. The company’s stock has gained 18% over the past twelve months.
By the end of the third quarter of 2021, Insider Monkey identified 35 hedge funds that had stakes in Cleveland-Cliffs Inc (NYSE:CLF). The total value of these stakes was over $682.05 million. As of February 14, 2022, Ken Fisher of Fisher Asset Management was the lead stakeholder in Cleveland-Cliffs Inc (NYSE:CLF). The fund owns more than 12.5 million shares of stock, which are worth $272.2 million.
On 8th November, GLJ Research analyst Gordon Johnson raised his price target on Cleveland-Cliffs Inc (NYSE:CLF) to $36.06 from $28.35 and reiterated a Buy rating on the shares.
4. Barrick Gold Corporation (NYSE:GOLD)
Number of Hedge Fund Holders: 41
Barrick Gold Corporation (NYSE:GOLD) engages in the exploration, mine development, production, and sale of gold and copper properties. The company was founded in 1983 and is headquartered in Toronto, Canada.
Out of the 867 hedge funds we track at Insider Monkey, 41 held stakes in Barrick Gold Corporation (NYSE:GOLD) by the end of the third quarter of 2021. The total value of these stakes was over $917.69 million.
Jean-Marie Eveillard’s First Eagle Investment Management was the top shareholder of Barrick Gold Corporation (NYSE:GOLD) as of this February. The total stake of the fund in Barrick Gold Corporation (NYSE:GOLD) was $510.61 million, which accounts for 1.27% of its investment portfolio.
Ariel Investments mentioned Barrick Gold Corporation (NYSE:GOLD) in its second-quarter 2021 investor letter. Here’s what the firm had to say about the company:
“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.”
3. Alcoa Corporation (NYSE:AA)
Number of Hedge Fund Holders: 44
Alcoa Corporation (NYSE:AA) produces and sells bauxite, alumina, and aluminum products in the United States, Spain, Australia, Brazil, Canada, and internationally. The company operates through three segments: Bauxite, Alumina, and Aluminum. The company was founded in 1888 and is headquartered in Pittsburgh, Pennsylvania.
In November 2021, Wolfe Research analyst Timna Tanners initiated coverage of Alcoa Corporation (NYSE:AA) with an Outperform rating and a $63 price target.
By the end of the third quarter, Insider Monkey found Alcoa Corporation (NYSE:AA) to be a part of 44 hedge fund portfolios. The total stakes that these funds had in the company are worth $1.74 billion, up from $1.15 billion the prior quarter with 44 positions. Of the 44 hedge funds, Ken Fisher’s Fisher Asset Management had the largest stake in the company. As of this February, the fund’s stake in the company was a hefty $378.5 million, which covers 0.21% of Fisher Asset Management’s 13F portfolio.
2. Newmont Corporation (NYSE:NEM)
Number of Hedge Fund Holders: 48
Newmont Corporation (NYSE:NEM) engages in the production and exploration of gold, copper, silver, zinc, and lead. The company has operations in the United States, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, and Ghana. Newmont Corporation (NYSE:NEM) was founded in 1916 and is headquartered in Denver, Colorado.
Jean-Marie Eveillard’s First Eagle Investment Management, of the 47 other hedge funds, has the majority stake in Newmont Corporation (NYSE:NEM) as of the third quarter. First Eagle Investment Management owns over 17.4 million shares of the stock, which amounts to a stake value of $1.08 billion.
First Eagle Investment Management published its third-quarter 2021 investor letter in which it mentioned Newmont Corporation (NYSE:NEM). Here’s what the experts at First Eagle had to say about the company:
“The largest gold miner in the world, Newmont shares lost ground in what was a volatile and ultimately down quarter for the price of gold. The Colorado-based company has continued to execute well in what has been a challenging environment. The company recently reaffirmed its full-year 2021 production guidance, but indicated that it was likely to come in at the mid to low point of the range provided as a result of disruptions from Covid-19 as well as severe weather events. It also noted that inflation pressures were likely to push its costs higher in 2021. None of this changes our opinion of the stock, which has historically offered steady production anchored in good jurisdictions, a good pipeline of organic projects, a strong balance sheet and proven management.”
1. Freeport-McMoRan Inc. (NYSE:FCX)
Number of Hedge Fund Holders: 66
Freeport-McMoRan Inc. (NYSE:FCX) engages in the mining of mineral properties in North America, South America, and Indonesia. The company primarily explores copper, gold, molybdenum, silver, and other metals, as well as oil and gas. The stock has gained 32% over the last 12 months. Freeport-McMoRan Inc. (NYSE:FCX) was incorporated in 1987 and is headquartered in Phoenix, Arizona.
Last November, Wolfe Research analyst Timna Tanners initiated coverage of Freeport-McMoRan Inc. (NYSE:FCX) with an Outperform rating and gave the company a $47 price target.
By the end of the third quarter of 2021, 66 hedge funds out of 867 held stakes in Freeport-McMoran Inc. (NYSE:FCX). The total value of these stakes was $3.21 billion. As of February 14, 2022, Ken Fisher’s Fisher Asset Management was the top shareholder in the company by total stakes. Mr. Fisher’s total stakes in Freeport-McMoran Inc. (NYSE:FCX) are an astounding $2.03 billion.
You can also take a look at 15 Best Energy Stocks to Buy Now and 10 Largest Agricultural Companies.
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Disclosure. None. 11 Best Commodity Stocks To Invest In is originally published on Insider Monkey.
