In this article, we reviewed the 10 best cobalt stocks to buy for 2021 and why most market research firms were bullish on cobalt stocks.
Cobalt is fast becoming one of the most sought-after commodities in the world. According to a report by New York-based leading business intelligence firm Expert Market Research, the global cobalt market witnessed a demand of 115.54 kilo tons in 2020. The market is further expected to grow at a compound annual growth rate of 9% between 2020 and 2026 to reach a volume of 193.77 kilo tons by 2026. Industry experts believe that the need for the hard and silvery metal could grow four times the current demand in the coming years.
Growth Catalysts for Cobalt Stocks
The need for cobalt is driven by its use in several items critical to the world economy. Cobalt is a by-product of mining nickel and copper from the earth. The metal has to be processed before it can be made available in the market. Most of the mines where cobalt is found, sites of nickel and copper mining, are located in the Democratic Republic of Congo, China, Australia, Russia, Canada, and some other countries. However, most of the cobalt processing facilities are in China even though it only produces a fraction of the total Cobalt in the world.
This is partly to do with the high demand of cobalt in China. The metal is mainly used in lithium-ion batteries and semiconductor chips that are used in electronic devices and vehicles. Although it has other uses as well, it is estimated that more than 41% of refined cobalt is used in batteries. The metal is used together with nickel in these batteries, and there is as yet no commercially viable alternative to this pairing in the market. Since China is the largest manufacturer of electronics in the world, the country has a monopoly on the import of the metal.
As climate change ushers in the era of electric vehicles, more and more cobalt is being refined for use in electric vehicle (EV) batteries. Typically, an EV battery requires 9 kilograms of cobalt whereas a smartphone battery only requires about 30 grams. Since the EV boom is just beginning, it is unlikely that cobalt demand is going down soon. One of the best ways for investors to take advantage of this situation is by buying shares in the companies that are mining nickel and copper, and by default, cobalt, around the world.
At the end of 2019, most market research firms were bullish on cobalt stocks. However, the onset of the pandemic slowed down business. The grounding of aircraft – cobalt-based alloys are used in jet engines – hit the demand for the metal in the United States and Europe. Elsewhere, the demand slowed as the coronavirus hit supply chains. Mining disruptions in African nations like Morocco and Madagascar also affected prices. With 2021 well underway, there is still a lot of concern around the cobalt industry in the finance world.
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With this industry context in mind, here are the top 10 best cobalt stocks to buy in 2021 as the coronavirus shadow recedes and the aviation industry takes off, more EVs hit the road, and record numbers of electronics are manufactured in factories around the world.
Best Cobalt Stocks to Buy Now
10. Panoramic Resources (ASX: PAN.AX)
Panoramic Resources (ASX: PAN) is a mining company that explores, evaluates, develops and produces mineral deposits. The firm has stakes in nickel, gold, platinum group minerals, exploration projects in Australia, and exploration projects overseas. Some of the projects it is working on include the Savannah Nickel Project and Copernicus Nickel Project, the Gum Creek Gold Project; and the Panton PGM Project. The overseas operations of the firm are mostly based in northern European countries.
The market cap of the firm is estimated to be over $226 million and it posted a revenue of $45 million in December 2020. Earlier this month, the company disclosed that it was restarting a nickel project in Western Australia that had been put on hold in 2016 for maintenance. The mining work on the site is expected to start later this year. Usually, cobalt is found alongside nickel in a chemically combined form in mines. As the company starts work on another nickel mine, it is placed 10th on our list of top 10 best cobalt stocks for 2021.
9. Glencore (LSE: GLEN.L)
Glencore (LSE: GLEN.L) is a Switzerland-based multinational corporation that is one of the largest producers of cobalt in the world by virtue of mines in the Democratic Republic of Congo and operations in Australia, Canada, and Norway. The company has interests in copper, cobalt, nickel, zinc, lead, chrome ore, ferrochrome, vanadium, alumina, aluminum, tin, and iron ore. It also does oil exploration, production, distribution, storage, and bunkering, offering coal, crude oil, and natural gas to different companies globally.
The company has a market cap of $53 billion and posted more than $140 billion in revenue in December 2020. Last month, the company announced that Tony Hayward, the chairman of the firm, would be stepping down from his role next year. Hayward has overseen the company for the past nine years. The shares of the firm have been steadily rising over the past few months on the back of increased copper and battery metal demand. Glencore is placed 9th on our list of top 10 best cobalt stocks for 2021.
8. Freeport-McMoRan Inc. (NYSE: FCX)
Freeport-McMoRan Inc. (NYSE: FCX) is an Arizona-based mining company with stakes in copper mining in the Democratic Republic of Congo in partnership with other companies. Cobalt is a by-product of copper mining. The firm has mining interests in South America and Indonesia as well. Freeport-McMoRan mines copper, gold, molybdenum, silver, and other rare metals, in addition to oil and gas. The firm operates more than 150 wells around the world, with the oil assets primarily in California.
It has a market cap of more than $50 billion and posted a revenue of more than $14 billion in December 2020. As the world economy reopened following the vaccinations against the pandemic, the demand for copper from China and US drove the shares of the firm to new highs in March. The demand for the metal is expected to touch new highs this year as China pursues a clean energy drive, prioritizing the manufacture of electric vehicles that need copper and cobalt in handsome quantities. The firm is 8th on the list of top 10 best cobalt stocks for 2021.
As of the end of the fourth quarter, 61 hedge funds in Insider Monkey’s database of 887 funds held stakes in FCX, compared to 57 funds in the third quarter. Fisher Asset Management is the biggest stakeholder in the company, with 42.9 million shares, worth $1.1 billion.
7. China Molybdenum Co., Ltd. (HKSE: 3993.HK)
China Molybdenum Co., Ltd. (HKSE: 3993.HK) is a Luoyang-based company engaged in the mining, smelting, processing and trading of metals. The company is one of the largest producers of cobalt in the world, also through mining interests in the Democratic Republic of Congo (DRC). The company is one of the rare firms that mines and refines the cobalt metal. In 2018, this led to the overflow of cobalt in the markets as China smelted more cobalt to drive down prices. The company is also famous for the mining of many rare-earth elements.
The firm has a market cap of over close to $20 billion and posted over $17 billion in revenue in December 2020. Late last year, the company purchased a stake in another cobalt ore project in DRC, where a mine holds an estimated 3.1 million metric tons of the metal. The sales of cobalt for the firm increased by nearly 15% in 2020 compared to 2019. After a slow 2020, the metal is expected to increase in demand in 2021. The Chinese mining company is 7th on our list of top 10 best cobalt stocks to buy for 2021.
6. Vale S.A. (NYSE: VALE)
Vale S.A. (NYSE: VALE) is a Brazil-based metals and mining company. The firm has interests in ferrous metals, base metals and the coal segment of the mining industry. It produces iron ore, manganese, ferroalloys, nickel and its by-products, such as copper, gold, silver, cobalt, and precious metals. The company is also in the business of extracting metallurgical and thermal coal. The company focuses on mining and selling of nickel and has plans to expand in the area.
It has a market cap of over $92 billion and posted more than $40 billion in revenue in December 2020. Earlier this month, the company announced that it had approved a plan to buy back at least 270 million shares. The firm said that the buyback plan signaled to investors that the shares of the firm were grossly undervalued. The number of shares being bought back equal 5.3% of all outstanding shares. The Brazilian firm comes sixth on our list of top 10 best cobalt stocks to buy for 2021.
There were 35 hedge funds that hold a position in VALE S.A. The biggest stakeholder of the company is Fisher Asset Management, with 40.3 million shares, worth $675.5 million.
5. Horizonte Minerals Plc (LSE: HZM.L)
Horizonte Minerals Plc (LSE: HZM.L) is a United Kingdom-based nickel development firm that owns mining rights in northern Brazil. The company has interests in gold, silver and other base metal projects as well, most of them in Brazil and Peru. The company has been primarily in the business of mining nickel but has now started to shift its focus to the production of cobalt as well. The firm said it has raised more than $18 million for new ventures in this regard.
The company has a market cap of more than $127 million. In a pre-revenue report, the company noted that the effects of the coronavirus pandemic had continued into 2021 but it was hopeful that 2021 would be a more productive year for the firm. It also announced that it had achieved a $300 million senior debt facility to fund a mining project in Brazil. Horizonte Minerals is fifth in our list of top 10 best cobalt stocks to buy for 2021.
4. Australian Mines Limited (ASX: AUZ.AX)
Australian Mines Limited (ASX: AUZ.AX) is a Brisbane-based mining firm that prioritizes the mining and development of metals for use in new technologies. The firm has interests in cobalt-scandium-nickel projects in Australia. One of the biggest projects for the company, Its flagship Sconi, is considered the most advanced production-wise in the country. The project has been estimated to deliver an annual average production of 3,010 tonnes of cobalt sulphate, 24,420 tonnes of nickel sulphate and 77 tonnes of scandium oxide for at least the first 20 years.
The company has a market cap of more than $63 million and has an annual revenue of more than $17 million. Australian Mines had previously said that the reserves of cobalt and nickel at its flagship project site were enough to produce the equivalent of at least 3 million to 6 million electric vehicle battery packs. As the demand for EVs increases, the company would stand to gain from this boom.
3. Wheaton Precious Metal Corp. (NYSE: WPM)
Wheaton Precious Metal Corp. (NYSE: WPM) is a Vancouver-based precious metals streaming company. The company has streaming agreements with tens of other companies for different mines around the world. Some of these mines are operational while others are still in the developmental stage. Wheaton currently has proven and probable cobalt reserves of tens of millions of pounds, but also sizable reserves of gold, silver and palladium.
The company has a market cap of more than $18 billion and posted more than $1 billion in revenue in December 2020. Last month, the company announced that it had reached an agreement for a gold streaming project in Chile. The construction for the project is expected to start later this year and gold production from the site would begin in 2024. The company posted record revenues and operating cash flows in 2020. It is placed third on our list of top 10 best cobalt stocks to buy for 2021.
As of the end of the fourth quarter, there were 34 hedge funds in Insider Monkey’s database that held stakes in Wheaton Precious Metal Corp., compared to 29 funds in the third quarter. First Eagle Investment Management, with 16.2 million shares of WPM, is the biggest stakeholder in the company.
In one of their investor letters, First Eagle Investment Management highlighted a few stocks and Wheaton Precious Metals Corp. (NYSE:WPM) is one of them. Here is what First Eagle said:
“The strength in the price of gold was generally supportive of gold-related equities whose performance historically has been leveraged to the gold price. One such example is Wheaton Precious Metals, a Canadian streaming company that maintains, in our view, a high-quality, low-cost portfolio of precious metal purchase agreements that is well diversified across mining partners, geographies and metal types. Despite pandemic-related suspensions of six of its mining assets, Wheaton posted a 50% year-over-year increase in operating cash flow for the first quarter, which allowed the company to reduce its net debt while raising its quarterly dividend payment.”
2. Clean TeQ Holdings Limited (ASX: CLQ.AX)
Clean TeQ Holdings Limited (ASX: CLQ.AX) is an Australia-based company that offers metal recovery and industrial water treatment services. The firm provides cutting-edge technology for the extraction and purification of base and precious metals, as well as radioactive elements, such as uranium. It also has interest in the mining of nickel that can be used to produce cobalt. The company ranks second on our list of top 10 best cobalt stocks to buy in 2021.
The company has a market cap of close to $200 million and has more than $22 million in earnings every year. Earlier this year, the chief of the company bought hundreds of thousands worth of shares in the firm, signaling that he thought the stock was undervalued. The stocks are one of the best options in the cobalt market. Since the metal is important for new technology, there is plenty of potential for growth.
1. Carpenter Technology Corporation (NYSE: CRS)
Carpenter Technology Corporation (NYSE: CRS) is a Pennsylvania-based company that develops, manufactures and distributes metal alloys. These alloys are then used in many products around the world like electronics, aircraft and electric vehicles. The firm was founded in 1889 and has now become a market leader in the production of alloys like titanium, nickel, and cobalt, as well as specifically engineered ones for additive manufacturing (AM) processes and soft magnetics applications.
The company has a market cap of more than $2 billion and posted a revenue of more than $2 billion in June 2020. Earlier this year, the shares of the company rose more than 20% after the company implemented cost reduction initiatives and some portfolio reassignments. The firm also won some key defense and aerospace contracts to bolster investor confidence. The firm is first on our list of top 10 best cobalt stocks for 2021.
With a $14.2 million stake in Carpenter Technology Corporation, Fisher Asset Management owns 486,003 shares of the company as of the end of the fourth quarter of 2020. Our database shows that 14 hedge funds held stakes in CRS as of the end of the fourth quarter, versus 16 funds in the third quarter.
You can also take a peek at 10 Best Stocks To Buy Now According To Quant Billionaires and 15 Most Valuable Technology Companies in the World.
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Disclosure: None. 10 Best Cobalt Stocks To Buy For 2021 is originally published on Insider Monkey.
