In this article we discuss the 5 best commodity stocks to buy now. If you want to read our detailed analysis of these stocks, go directly to 10 Best Commodity Stocks To Buy Now.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, advertising technology one of the fastest growing industries right now, so we are checking out stock pitches like this under-the-radar adtech stock that can deliver 10x gains. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now, let’s take a look at the 5 best commodity stocks to buy now:
5. Southern Copper Corporation (NYSE: SCCO)
Number of Hedge Fund Holders: 23
Arizona-based Southern Copper mines key commodities including copper molybdenum, silver, and zinc, silver and gold, with assets mostly in South America. According to recent reports by the La República newspaper, the company is planning to spend a whopping $8 billion in various mining projects, including some in Tia Maria mine.
As of the end of the fourth quarter, there were 23 hedge funds in Insider Monkey’s database that held stakes in SCCO, compared to 27 funds in the third quarter. Ken Fisher’s Fisher Asset Management, with 4.2 million shares of SCCO, is the biggest stakeholder in the company.
4. Cameco Corporation (NYSE: CCJ)
Number of Hedge Fund Holders: 25
Cameco ranks 4th in the list of 10 best commodity stocks to buy now. The stock has gained 110% over the last 12 months. In the fourth quarter, the company posted non-GAAP EPS of $0.12, beating the Street forecasts by $0.16. Revenue in the quarter fell 37% to $550 million but was still above the Street’s consensus by $240.98 million
According to our database, the number of CCJ’s long hedge funds positions increased at the end of the fourth quarter of 2020. There were 25 hedge funds that hold a position in Cameco Corp. compared to 20 funds in the third quarter. The biggest stakeholder of the company is David Iben’s Kopernik Global Investors, with 11 million shares, worth $147.6 million.
3. Rio Tinto Group (NYSE: RIO)
Number of Hedge Fund Holders: 26
Anglo-Australian Rio Tinto is one of the biggest commodities miner in the world, dealing in iron ore, copper, diamonds, gold and uranium. Rio Tinto is also a great investment option for income investors. In February 2021, the company posted strong quarterly results, driven by an upbeat demand of iron ore from China. The company also announced that it would pay a final dividend of $5 billion and a special dividend of $1.5 billion. The total shareholder payout for 2020 was $9 billion, the biggest in the company’s history.
A total of 26 hedge funds tracked by Insider Monkey were bullish RIO at the end of the fourth quarter, up from 23 funds a quarter earlier.
2. Barrick Gold Corporation (NYSE: GOLD)
Number of Hedge Fund Holders: 53
Barrick Gold ranks 2nd in the list of 10 best commodity stocks to buy now. The gold miner has assets in Carlin, Cortez, Turquoise Ridge, Long Canyon, Phoenix, Pueblo Viejo, Loulo-Gounkoto, Kibali, Hemlo and Porgera. The company is also a major producer of copper. Bank of America recently gave bullish comments for Barrick Gold along with other gold stocks. The firm likes Barrick Gold because of the company’s policies of giving a priority to shareholder returns. BofA has a Buy rating for GOLD stock.
First Eagle Investment Management currently holds 26.8 million shares of Barrick Gold Corp. that amounts $610.8 million. GOLD occupies 1.72% of First Eagle’s total portfolio.
GoodHaven Capital Management, in their Q4 2020 investor letter, mentioned Barrick Gold Corporation (NYSE: GOLD) and emphasized their views on the company. Here is what GoodHaven Capital Management has to say about Barrick Gold Corporation in their Q4 2020 investor letter:
“Barrick’s recent results have been consistent with our expectations. Barrick has begun inching up the dividend as planned, which should continue increasing absent them finding a large acquisition (they want more copper assets) or a materially lower price of gold. We’d also expect periodic special dividends during stronger gold price environments. At current gold prices we estimate normalized free cash flow at Barrick of over $1.60/share. The company is now about net-debt free. We see plenty of upside and absent a collapse in gold not too much downside. Missing from much of the public discussions about gold, but potentially interesting, is the supply/demand backdrop. As the Wall Street Journal (8/16/20) recently said “gold is amongst the rarest metals in the earth’s crust and much of the easier to get to ore has already been mined. What is left is harder to find and more expensive to extract…” According to the World Platinum Council, it was forecasted that there will be a supply and demand imbalance of 1.2 million ounces globally. The potential macro tailwinds that could add value to an alternate currency like gold including currency concerns, excessive debt and continuing negative real interest rates are still out there. While the shares performed well for the year they were weak in the second half and now stand more attractively priced.”
1. Freeport-McMoRan Inc. (NYSE: FCX)
Number of Hedge Fund Holders: 61
Freeport McMoran is one of the biggest miners in the U.S., with assets in North America, South America and Indonesia. The company explores key and important commodities like copper, gold, molybdenum, silver, as well as oil and gas. The company has reinstated dividend for 2021. The stock has a dividend yield of 0.93%. The company has benefitted from the rise in copper prices in 2020. For 2021, it expects EBITDA at $11 billion assuming the current copper prices.
According to our database, the number of FCX’s long hedge funds positions increased at the end of the fourth quarter of 2020. There were 61 hedge funds that hold a position in FCX compared to 57 funds in the third quarter. The biggest stakeholder of the company is Fisher Asset Management, with 42.9 million shares, worth $1.1 billion.
You can also take a peek at 10 Best Battery Stocks to Buy Now and 10 Best Oil and Energy Stocks To Buy Now.
