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.
11. Huntsman Corporation (NYSE:HUN)
Number of Hedge Fund Holders: 38
Huntsman Corporation (NYSE:HUN) is one of the best basic materials stocks to invest in. Earlier on May 28, Huntsman Corporation announced the completion of a review of its European Maleic Anhydride business.
As a direct outcome of this review, the company will close its Maleic Anhydride facility located in Moers, Germany. The shutdown of operations at the Moers site is expected to be finalized by the end of Q2 this year. The European Maleic Anhydride business experienced an adjusted EBITDA loss of ~$10 million in 2024.
Following the closure of the German facility, Huntsman plans to serve its European customers from its existing North American facilities, particularly those in Pensacola, Florida, and Geismar, Louisiana. The decision to close the Moers facility is expected to result in a one-time non-cash asset impairment charge of ~$75 million for Huntsman during Q2 2025.
Huntsman Corporation (NYSE:HUN) manufactures and sells diversified organic chemical products. It operates in 3 segments: Polyurethanes, Performance Products, and Advanced Materials.
10. LyondellBasell Industries (NYSE:LYB)
Number of Hedge Fund Holders: 38
LyondellBasell Industries (NYSE:LYB) is one of the best basic materials stocks to invest in. In the earlier days of July, LyondellBasell Industries announced an expanded partnership with Polynt, which is a global leader in specialty polymers and intermediates. The two companies are jointly developing a high-quality resin specifically for the marine sector.
The new resin will use LYB’s Styrene +LC (low carbon) solution. LYB’s +LC solutions are produced using a mass balance method, certified under the International Sustainability and Carbon Certification/ISC PLUS system. These products are derived from bio-circular feedstocks and enable companies to reduce their Scope 3 greenhouse gas/GHG emissions.
These solutions maintain the same high performance and reliability as traditional fossil-based products, but with a lower carbon footprint. Polynt is incorporating LYB’s Styrene +LC into the production of specialized resins for boat and yacht construction.
LyondellBasell Industries (NYSE:LYB) is a chemical company with operations in the US, Germany, Mexico, Italy, Poland, France, Japan, China, the Netherlands, and internationally.
9. Eastman Chemical Company (NYSE:EMN)
Number of Hedge Fund Holders: 30
Eastman Chemical Company (NYSE:EMN) is one of the best basic materials stocks to invest in. Earlier on June 11, Eastman announced the launch of Esmeri CC1N10. This new product is a high-performance and readily biodegradable cellulose ester micropowder designed for color cosmetics. Sourced from sustainably managed forests, Esmeri CC1N10 aims to meet the European Union’s stringent regulations for synthetic polymer microparticles.
Esmeri CC1N10 offers a sustainable micropowder solution without compromising performance in color cosmetics. It provides a visually superior soft-focus optical effect, improved color intensity and payoff, and uniform coverage. The product is also highly compatible with lipophilic cosmetic formulations.
Using over a century of expertise in cellulose esters technology, Eastman developed Esmeri CC1N10 to comply with the European Commission’s Regulation EU 2023/2055 on synthetic polymer microparticles. The innovation aligns with the European Union’s Zero Pollution Action Plan, which aims to reduce microplastics released into the environment by 30% by 2030.
Eastman Chemical Company (NYSE:EMN) is a specialty materials company with operations in the US, China, and internationally.
8. Cleveland-Cliffs Inc. (NYSE:CLF)
Number of Hedge Fund Holders: 43
Cleveland-Cliffs Inc. (NYSE:CLF) is one of the best basic materials stocks to invest in. On June 20, Cleveland-Cliffs announced the commissioning of its new state-of-the-art Vertical Stainless Bright Anneal Line at its Coshocton Works facility in Coshocton, Ohio.
The expansion involved a $150 million capital investment and is designed to supply premium stainless steel for high-end automotive and appliance applications. The new annealing line incorporates a 100% hydrogen atmosphere, replacing traditional acid-based processing, and features a hydrogen recovery unit that recycles hydrogen, using a 50/50 mix of new and used hydrogen in the process.
The investment in the new Vertical Stainless Bright Anneal Line at Coshocton Works shows Cleveland-Cliffs’ commitment to innovation and sustainability.
Cleveland-Cliffs Inc. (NYSE:CLF) offers hot-rolled, cold-rolled, electrogalvanized, hot-dip galvanized and galvannealed, aluminized, galvalume, enameling, and advanced high-strength steel products.
7. Dow Inc. (NYSE:DOW)
Number of Hedge Fund Holders: 43
Dow Inc. (NYSE:DOW) is one of the best basic materials stocks to invest in. On July 7, Dow announced that its Board of Directors approved the shutdown of 3 upstream assets in Europe, in addition to certain corporate and other assets globally. The decision follows an initial announcement in April this year regarding European asset actions, taken in response to structural challenges, a difficult market, and an ongoing challenging cost and demand landscape in the region.
The specific asset shutdowns include an ethylene cracker in Böhlen, Germany, which is a part of the Packaging & Specialty Plastics segment, expected to shut down in Q4 2027; Chlor-alkali & vinyl/CAV assets in Schkopau, Germany, within the Industrial Intermediates & Infrastructure segment, also expected to cease operations in Q4 2027; and a basic siloxanes plant in Barry, UK, which is a part of the Performance Materials & Coatings segment, expected to shut down in mid-2026.
The move aims to improve the company’s ability to supply profitable derivative demand and optimize margins. The asset shutdowns are projected to result in an Operating EBITDA uplift starting in 2026, ramping to 50% of the ~$200 million target by the end of 2027, with full delivery by 2029.
Dow Inc. (NYSE:DOW) provides various materials science solutions for packaging, infrastructure, mobility, and consumer applications in the US, Canada, Europe, the Middle East, Africa, India, the Asia Pacific, and Latin America.
6. Alcoa Corporation (NYSE:AA)
Number of Hedge Fund Holders: 47
Alcoa Corporation (NYSE:AA) is one of the best basic materials stocks to invest in. On July 2, Alcoa announced the completion of the sale of its 25.1% ownership interest in the Ma’aden joint venture to the Saudi Arabian Mining Company, Ma’aden. The transaction was conducted under a binding share purchase and subscription agreement and resulted in Alcoa receiving 86 million Ma’aden shares valued at $1.2 billion, in addition to $150 million in cash.
Before this, Alcoa held a 25.1% stake in the JV, with Ma’aden owning the remaining 74.9%. Following the divestment, Alcoa’s ownership in Ma’aden has been reduced to 2% of the current outstanding shares. Under the agreement, Alcoa is required to retain its Ma’aden shares for a minimum period of 3 years.
After the initial holding period, Alcoa can sell one-third of the shares on each of the third, fourth, and fifth anniversaries of the transaction’s closing date. The minimum holding period may also be shortened under specific circumstances.
Alcoa Corporation (NYSE:AA) engages in the bauxite mining, alumina refining, aluminum production, and energy generation business internationally.
5. International Flavors & Fragrances Inc. (NYSE:IFF)
Number of Hedge Fund Holders: 47
International Flavors & Fragrances Inc. (NYSE:IFF) is one of the best basic materials stocks to invest in. On July 10, International Flavors & Fragrances (or IFF) officially unveiled its new Immersive Experience Hub within its Singapore Innovation Center. This multi-sensory facility is designed to enhance customer collaboration by allowing IFF to conceptualize, test, and refine product ideas in simulated real-world environments.
The Immersive Experience Hub integrates 360-degree video technology with scent, taste, sound, and touch to create realistic simulations. This enables virtual tours, contextual tastings, fragrance immersion, and real-time co-creation. The new facility complements IFF’s largest dairy and beverage pilot plant in Southeast Asia, located in the same building, creating a fully integrated ecosystem from consumer insights to concept development, application, and small-scale commercialization.
To celebrate the launch and Singapore’s upcoming 60th birthday/SG60, IFF surveyed 1,000 Singaporeans to identify their favorite local scents, foods, and beverages. Inspired by these findings, IFF flavorists and perfumers developed the SG60 collection, which was showcased at the Immersive Experience Hub launch.
International Flavors & Fragrances Inc. (NYSE:IFF) manufactures and markets food, beverage, health and biosciences, scent, pharma solutions, and complementary adjacent products in the US, Europe, Hyderabad in India, and internationally.
4. Ecolab Inc. (NYSE:ECL)
Number of Hedge Fund Holders: 63
Ecolab Inc. (NYSE:ECL) is one of the best basic materials stocks to invest in. On June 16, Ecolab Life Sciences announced the launch of Purolite AP+50 resin, which features a 50-micron bead size and offers the highest dynamic binding capacity within the AP resin platform.
The resin uses Ecolab’s patented Jetted resin bead manufacturing technology. Purolite AP+50 assists biopharmaceutical companies and Contract Development and Manufacturing Organizations/CDMOs in purification.
This new resin joins Ecolab’s existing purification resins, which include the recently launched Purolite DurA Cycle A50 for longer lifetimes and Purolite 70 CH1 to target complex antibody fragments.
Ecolab Inc. (NYSE:ECL) provides water, hygiene, and infection prevention solutions and services through 4 segments: Global Industrial, Global Institutional & Specialty, Global Healthcare & Life Sciences, and Global Pest Elimination.
3. DuPont de Nemours Inc. (NYSE:DD)
Number of Hedge Fund Holders: 64
DuPont de Nemours Inc. (NYSE:DD) is one of the best basic materials stocks to invest in. On June 26, DuPont announced the launch of FilmTec Hypershell XP RO-8038 element, which is an advanced reverse osmosis/RO solution engineered for the dairy processing industry.
The FilmTec Hypershell XP RO-8038 element is tailored for the concentration and polishing of various dairy process streams. Through advancements in membrane performance, the element can provide up to 50% higher productivity and flow, or achieve up to 50% less energy demand when operating at the same flux as comparable dairy membrane elements on the market.
FilmTec Hypershell XP RO-8038 element expands active membrane area, which boosts both productivity and element flow. Its ability to operate with lower energy demand without compromising flux translates into operational cost savings.
DuPont de Nemours Inc. (NYSE:DD) provides technology-based materials and solutions in the US, Canada, the Asia Pacific, Latin America, Europe, the Middle East, and Africa.
2. The Sherwin-Williams Company (NYSE:SHW)
Number of Hedge Fund Holders: 68
The Sherwin-Williams Company (NYSE:SHW) is one of the best basic materials stocks to invest in. Earlier on May 22, the Sherwin-Williams Company announced Radiant Lilac SW 0074 as “The Loneliest Color” for 2025. This initiative is now in its second year and aims to disrupt traditional trend forecasting by celebrating the company’s least tinted and least popular color, which in 2024 saw fewer than 1,000 gallons tinted, compared to millions for top colors.
Radiant Lilac SW 0074 is described as a shade that inspires self-expression and color confidence. Sherwin-Williams has partnered with professional basketball player Paige Bueckers to promote “The Loneliest Color”. Bueckers is known for her dominance on the court and love for the color purple. She expressed that the color conveys a quiet confidence.
Bueckers debuted “The Loneliest Color” during her first professional career tunnel walk in her hometown of Minneapolis, against the Lynx. For this, she collaborated with Harlem couturier Dapper Dan, who served as Creative Director for the campaign. Dapper Dan designed and crafted a custom tracksuit for Bueckers, inspired by Radiant Lilac SW 0074.
The Sherwin-Williams Company (NYSE:SHW) develops, manufactures, distributes, and sells paint, coatings, and related products to professional, industrial, commercial, and retail customers.
1. Linde (NASDAQ:LIN)
Number of Hedge Fund Holders: 75
Linde (NASDAQ:LIN) is one of the best basic materials stocks to invest in. On June 23, Linde announced a new long-term agreement with Blue Point Number One, which is a joint venture comprising CF Industries, JERA, and Mitsui & Co. Under this agreement, Linde will supply industrial gases to Blue Point’s low-carbon ammonia plant, which will have a capacity of 1.4 million metric tons, located in Ascension Parish, Louisiana.
This facility is anticipated to be one of the largest low-carbon ammonia projects globally. The ASU (air separation unit) will provide oxygen and nitrogen to the Blue Point project. Linde’s investment in this new on-site plant is expected to exceed $400 million, with a projected start-up in 2029.
This new facility will become the largest ASU in the Mississippi River corridor of southeast Louisiana, further strengthening Linde’s extensive US Gulf Coast infrastructure, which already includes multiple industrial gases production facilities and hydrogen & syngas infrastructure in the area.
Linde (NASDAQ:LIN) is an industrial gas company with operations in the US, China, Germany, the UK, Australia, Mexico, Brazil, and internationally.
While we acknowledge the potential of LIN to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk. If you are looking for an AI stock that is more promising than LIN and that has 100x upside potential, check out our report about this cheapest AI stock.
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