The basic materials sector encompasses companies that manufacture chemicals, building materials, and paper products. This sector is also engaged in commodities exploration and processing. According to Cognitive Market Research, the broader global materials market includes metals, plastics, ceramics, and composites and is expected to reach $1.9 trillion by 2026, growing at a CAGR of 5.2%. The market today is rapidly moving towards sustainable practices, therefore increasing the need for recyclable and bio-based materials. This is particularly important to the basic materials industry, as the market for green building materials alone was valued at $324 billion in 2023. Additionally, the market for biodegradable plastics is projected to grow at a CAGR of 12.8% and reach $7.3 billion by 2026.
Other sectors that contribute to the even broader chemicals and materials market include pharmaceuticals, electronics, and renewable energy. For instance, the electronics industry is increasingly seeking improved performance and miniaturization, which is also driving the adoption of advanced materials and high-purity compounds. It’s important to recognise that technological progress, which includes the integration of AI, automation, and digitalization, will bring about a major shift in manufacturing operations, augmenting both output quality and operational effectiveness. These developments further stimulate market expansion and competitiveness.
That being said, we’re here with a list of the 13 best basic materials stocks to invest in.
A portfolio manager studying various stocks and other securities on a tablet.
Methodology
We sifted through the Finviz stock screener to compile a list of the top basic materials stocks. We then selected the 13 stocks that were the most popular among elite hedge funds and that analysts were bullish on. The stocks are ranked in ascending order of the number of hedge funds that have stakes in them, as of Q1 2025. The hedge fund data was sourced from Insider Monkey’s database which tracks the moves of over 1000 elite money managers.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 373.4% since May 2014, beating its benchmark by 218 percentage points (see more details here).
13 Best Basic Materials Stocks to Invest in
13. Constellium (NYSE:CSTM)
Number of Hedge Fund Holders: 36
Constellium (NYSE:CSTM) is one of the best basic materials stocks to invest in. Earlier on June 12, Constellium and TARMAC Aerosave announced the successful recycling and remelting of aluminum from end-of-life aircraft into new and high-performance material suitable for future aerospace applications. This breakthrough shows the potential of aluminum to support circular economy goals in the aerospace industry without compromising material performance.
The collaboration included support from Airbus and ValoER and involved Constellium remelting aluminum recovered by TARMAC Aerosave from retired commercial aircraft. The resulting material met the performance requirements for new aircraft manufacturing. The next phase of the initiative aims to scale up the process for industrial application and extend it to all aluminum alloys used in metallic aircraft.
Aluminum recycling is highly energy-efficient and requies only 5% of the energy needed for primary production and emitting 95% fewer CO₂ emissions. This process helps conserve resources and reduce waste. As the sector intensifies efforts to reduce its carbon footprint, this full-circular model offers a promising direction.
Constellium (NYSE:CSTM) designs, manufactures, and sells rolled and extruded aluminum products for the aerospace, packaging, automotive, commercial transportation, general industrial, and defense end-markets.
TARMAC Aerosave is a specialist in aircraft and engine maintenance and transition.
12. FMC Corporation (NYSE:FMC)
Number of Hedge Fund Holders: 38
FMC Corporation (NYSE:FMC) is one of the best basic materials stocks to invest in. On June 30, FMC Corporation announced that its Tremisia fungicide received regulatory approval in Ukraine. This marks the first introduction of FMC’s novel fluindapyr technology into the EMEA region. The approval allows the use of Tremisia fungicide on oilseed rape, sunflower, and wheat, which covers over 10 million hectares of Ukrainian farmland.
Tremisia fungicide combines FMC’s proprietary fluindapyr molecule with flutriafol and offers a dual mode of action that provides extended crop protection. This fungicide targets a range of economically significant diseases, such as Alternaria and Sclerotinia in sunflower, and Septoria and rust in wheat.
The Ukrainian registration builds upon the successful commercialization of fluindapyr-based products by FMC in various countries. Conditional approval was also secured in the Philippines earlier this year. FMC expects to expand the availability of fluindapyr-based products to Bolivia, Chile, Colombia, Honduras, and India.
FMC Corporation (NYSE:FMC) is an agricultural sciences company that provides crop protection solutions to farmers in Latin America, North America, Europe, the Middle East, Africa, and Asia.