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11 Best Mining Stocks To Buy Now

In this article, we will discuss the 11 best mining stocks to buy now. If you want to explore similar stocks, you can also take a look at 5 Best Mining Stocks To Buy Now.

Mining Industry Analysis: Projections and Risks

The mining sector has been a traditional hedge against inflation. Commodity prices have been on a rollercoaster amid geopolitical unrest, rising inflation, and high interest rates. According to an industry analysis report by Research and Markets, the global mining industry was valued at $1.8 trillion in 2021 and is expected to reach a value of $2 trillion in 2022. Moving forward, the global mining industry is poised to grow at a CAGR of 12.9% through 2026 and reach a valuation of $3.35 trillion. While these numbers look promising, the mining industry is faced with a multitude of challenges. According to KPMG’s 2022 Mining Outlook, some of the top priority risks that the mining industry is being faced with in 2022 include ESG regulations, political instability, supply chain issues, and a global trade conflict among others. Russia’s invasion of Ukraine and its escalation is impacting the global commodities market and the London Metal Exchange is considering placing sanctions on Russian metals. Russia is a major producer and exporter of aluminum, copper, steel, and nickel.

A Potential Mining Supercycle

While the near-term outlook for the mining sector is somewhat cloudy and bleak, some analysts see the mining industry heading into a supercycle over the next couple of years. TD Securities Managing Director and Head of Mining Equity Research, Greg Barnes, appeared in an interview on MoneyTalk where he shared his insights and outlook for the mining sector. Greg Barnes thinks that though a slowing global economy, high inflation, high interest rates, and a strong dollar are putting pressure on commodity prices, the long-term supply and demand trends for metals favor the probability of a mining supercycle. Greg Barnes said that mining projects are “difficult to build and very expensive” and that in the near term he expects headwinds for the sector and supply constraints. However, in the long term, he thinks “the stage is being set” for a “potential super cycle” primarily driven by an increase in demand for battery metals such as copper, nickel, cobalt, and lithium.

The mining sector has been taking a beating in 2022, and some of the best-in-class miners are beaten down to bargain levels. Long-term investors can benefit from this sector downturn as they finally have a chance to buy some of the best mining stocks on weakness. These stocks include Alcoa Corporation (NYSE:AA), Newmont Corporation (NYSE:NEM), and Freeport-McMoRan Inc. (NYSE:FCX). These stocks among others are discussed in detail in the article below.

Our Methodology

To determine the best mining stocks to buy now, we reviewed the mining industry and identified key companies in the space. We looked at their projects, resources, and fundamentals. Finally, we narrowed down our selection to companies that had solid projects and pipelines, as well as positive market sentiment. We have arranged these stocks according to their popularity among elite hedge funds.

Best Mining Stocks To Buy Now

11. Glencore plc (OTC:GLNCY)

Number of Hedge Fund Holders: N/A

Glencore plc (OTC:GLNCY) is a diversified metals and mining company that produces, refines, and processes copper, cobalt, nickel, zinc, aluminum, and iron ore among other elements. Glencore plc (OTC:GLNCY) is trading at an attractive valuation and is offering a hefty dividend. As of October 10, the stock is trading at a PE ratio of 4x and is offering a forward dividend yield of 4.75%. The company has free cash flows of over $5 billion and has a trailing twelve-month operating margin of 8.4%. Glencore plc (OTC:GLNCY) is among the best mining stocks to buy now with abundant cash flows and strong margins.

On September 23, Glencore plc (OTC:GLNCY) announced that it has entered into an agreement with Newmont Corporation (NYSE:NEM) to acquire an 18.75% share in the MARA project. The MARA project is a mineral-rich project that has proven and probable mineral reserves of 11.7 billion pounds of copper and 7.4 million ounces of gold.

Wall Street sees upside to Glencore plc (OTC:GLNCY). On September 26, JPMorgan analyst Dominic O’Kane raised his price target on Glencore plc (OTC:GLNCY) to 690 GBP from 640 GBP and reiterated an Overweight rating on the shares. Shares of Glencore plc (OTC:GLNCY) have gained 10.34% over the past twelve months.

10. Southern Copper Corporation (NYSE:SCCO)

Number of Hedge Fund Holders: 17

Southern Copper Corporation (NYSE:SCCO) is involved in mining, exploring, and refining copper among other minerals. The company has operations in Peru, Mexico, Argentina, Ecuador, and Chile. At the end of Q2 2022, 17 hedge funds were long Southern Copper Corporation (NYSE:SCCO) and held stakes worth $274.8 million in the company.

Southern Copper Corporation (NYSE:SCCO) is a high-margin and cash-rich mining company. The company has free cash flows of over $2.7 billion and an operating margin of 50.28%. The stock is currently trading at bargain levels and is offering a strong dividend. As of October 10, Southern Copper Corporation (NYSE:SCCO) has a trailing twelve-month PE ratio of 12.65 and is offering a forward dividend yield of 8.35%. Southern Copper Corporation (NYSE:SCCO) is among the mining stocks that should be on investors’ radars right now.

On September 16, Morgan Stanley analyst Carlos De Alba raised his price target on Southern Copper Corporation (NYSE:SCCO) to $55 from $51 and upgraded the stock to Equal Weight from Underweight. This October, Deutsche Bank analyst Abhi Agarwal revised his price target on Southern Copper Corporation (NYSE:SCCO) to $45 from $47 and maintained a Hold rating on the shares.

As of June 30, Fisher Asset Management owns more than 3.5 million shares of Southern Copper Corporation (NYSE:SCCO) and is the largest shareholder in the company. The fund’s stakes are valued at $178.36 million in the company.

Some of the most profitable and cash-rich mining stocks to buy now include Southern Copper Corporation (NYSE:SCCO), Alcoa Corporation (NYSE:AA), Newmont Corporation (NYSE:NEM), and Freeport-McMoRan Inc. (NYSE:FCX).

9. BHP Group (NYSE:BHP)

Number of Hedge Fund Holders: 19

BHP Group (NYSE:BHP) engages in the mining of copper, silver, zinc, molybdenum, uranium, gold, and iron ore among other minerals. This August, Credit Suisse analyst Danielle Chigumira raised her price target on BHP Group (NYSE:BHP) to 2,300 GBP from 2,200 GBP and maintained a Neutral rating on the shares. As of October 10, the stock has gained 3.3% over the past twelve months.

As of October 10, BHP Group (NYSE:BHP) is trading at a PE multiple of 6x and has a forward dividend yield of 12.70%. The stock is a high-yielding mining stock to invest in and the company has free cash flows of $26.3 billion, and a trailing twelve-month operating margin of 50.36%.

At the close of Q2 2022, 19 hedge funds were eager on BHP Group (NYSE:BHP) and held stakes worth $1.38 billion in the company. As of June 30, Fisher Asset Management owns more than 18 million shares of BHP Group (NYSE:BHP) and is the top investor in the company. The investment covers 0.71% of Ken Fisher’s 13F portfolio.

8. Rio Tinto Group (NYSE:RIO)

Number of Hedge Fund Holders: 24

Rio Tinto Group (NYSE:RIO) is a leading mining company that primarily explores, mines, and processes aluminum, copper, diamonds, gold, iron ore, and lithium. On September 29, Rio Tinto Group (NYSE:RIO) announced that it has started producing spodumene concentrate. Spodumene concentrate is a mineral that is used for producing battery-grade lithium. Rio Tinto Group (NYSE:RIO) is one of the best mining stocks to buy now.

On September 26, JPMorgan analyst Lyndon Fagan raised his price target on Rio Tinto Group (NYSE:RIO) to 5,580 GBP from 5,350 GBP and maintained a Neutral rating on the shares. This October, Deutsche Bank analyst Liam Fitzpatrick revised his price target on Rio Tinto Group (NYSE:RIO) to 5,700 GBP from 5,800 GBP and reiterated a Hold rating on the shares.

At the end of Q2 2022, 24 hedge funds were long Rio Tinto Group (NYSE:RIO) and held stakes worth $1.72 billion in the company. Of those, Fisher Asset Management was the most prominent investor in the company with stakes worth $905.65 million.

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

Number of Hedge Fund Holders: 27

Vale S.A. (NYSE:VALE) is a major miner of iron ore and iron ore pellets that are used in steelmaking in Brazil and international markets. As of June 30, Fisher Asset Management owns more than 22 million shares of Vale S.A. (NYSE:VALE) and is the largest shareholder in the company. The fund’s stakes are valued at $324.5 million and the investment covers 0.22% of Ken Fisher’s 13F portfolio.

Wall Street is positive on Vale S.A. (NYSE:VALE). On September 12, RBC Capital analyst Tyler Broda upgraded Vale S.A. (NYSE:VALE) to Outperform from Sector Perform and raised his price target to $16 from $15. On October 5, Deutsche Bank analyst Liam Fitzpatrick revised his price target on Vale S.A. (NYSE:VALE) to $19 from $20 and reiterated a Hold rating on the shares.

Vale S.A. (NYSE:VALE) is ranked high among the best mining stocks to buy now because of its abundant cash flows and high profitability. The company has free cash flows of $11.72 billion and has a trailing twelve-month operating margin of 49.85%. As of October 10, the stock has a PE ratio of 3.53 and is offering a forward dividend yield of 9.79%.

At the end of Q2 2022, 27 hedge funds held stakes in Vale S.A. (NYSE:VALE). The collective stakes of these funds were valued at $1.78 billion.

Here is what GMO LLC had to say about Vale S.A. (NYSE:VALE) in its first-quarter 2022 investor letter:

“Let’s look at Vale (NYSE:VALE), the world’s largest iron ore producer, as a case study for how shareholders can be rewarded. Vale’s stock price is about where it was at the beginning of last year. Despite the market’s lack of enthusiasm, the company generated about $20 billion of free cash flow last year. Not bad for a company with a market cap of a little over $100 billion and no substantive debt as of the end of March. 4 What did the company do with all that cash? Last year, Vale paid out about $9 billion in regularly scheduled dividends and distributed another $10 billion between extra dividends and share repurchases. Combined with dividends distributed in the first quarter of this year and a recently announced share repurchase, Vale has returned or announced the return of over $33 billion since the beginning of last year, almost a 32% yield relative to the market cap of the company. Not a bad way to win.”

6. Cleveland-Cliffs Inc. (NYSE:CLF)

Number of Hedge Fund Holders: 29

Cleveland-Cliffs Inc. (NYSE:CLF) is one of the largest flat-rolled steel producers in North America. The company is involved in the mining and pelletizing of iron ore. Shares of Cleveland-Cliffs Inc. (NYSE:CLF) have pulled back in 2022, and now the stock is trading at bargain levels. As of October 10, Cleveland-Cliffs Inc. (NYSE:CLF) has a trailing twelve-month PE ratio of 2.39. The company has free cash flows of more than $3 billion, and the stock is among the best undervalued mining stocks to buy now.

On September 27, B. Riley analyst Lucas Pipes revised his price target on Cleveland-Cliffs Inc. (NYSE:CLF) to $32 from $37 and maintained a Buy rating on the shares. This September, Credit Suisse analyst Curt Woodworth revised his price target on Cleveland-Cliffs Inc. (NYSE:CLF) to $25 from $30 and reiterated an Outperform rating on the shares.

At the close of Q2 2022, 29 hedge funds disclosed ownership of stakes in Cleveland-Cliffs Inc. (NYSE:CLF). The total stakes of these hedge funds amounted to $450.96 million. As of June 30, Fisher Asset Management is the largest shareholder in Cleveland-Cliffs Inc. (NYSE:CLF) and has stakes worth $166.99 million in the company.

In addition to Cleveland-Cliffs Inc. (NYSE:CLF), other best-in-class names in the mining industry include Alcoa Corporation (NYSE:AA), Newmont Corporation (NYSE:NEM), and Freeport-McMoRan Inc. (NYSE:FCX).

Click to continue reading and see 5 Best Mining Stocks To Buy Now.

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Disclosure: None. 11 Best Mining Stocks To Buy Now is originally published on Insider Monkey.

AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

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The “Toll Booth” Operator of the AI Energy Boom

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Click to continue reading…