In this article, we discuss the 10 best mineral stocks to buy now.
Mining stocks have registered incredible year-to-date gains as the demand for minerals outpaces the supply in the post-pandemic economy. According to a report by the World Bank, gold prices, which are at record highs, are actually expected to decline through 2030, barring a market crash that propels interest in the precious metal as a safe haven. However, the prices of other metals and minerals like copper, lithium, and cobalt are likely to increase as the demand rises without a meaningful increase in supply.
Mineral stocks are also likely to be affected by the rise in Environment, Social, and Governance (ESG) protocols globally that place energy transition at the core of their philosophy. A study by the S&P Global Market Intelligence has found that as EV demand rises, the central challenge for mining companies will be navigating the increase in demand for minerals used in EVs, like copper, lithium, and iron, while balancing ESG concerns to keep investors happy.
Agile supply chains and the increased investments towards rare earths will also play an important role for miners in the coming years. A report by Research and Markets has revealed that the global mining market, which was worth around $1.6 trillion at the end of 2020, will climb above $1.8 trillion in 2021 and reach around $2.4 trillion by 2025, growing at a compound annual growth rate more than 12% during the period. The Asia-Pacific region is likely to dominate this story.
Mining companies are also becoming smarter and more effective with the help of technology and the use of renewable energy has actually helped lower costs of operations in some areas of the world. Mining stocks are a good investment choice because they have growth potential and also often pay healthy dividends, a rare combination in the finance world. Some of the best mineral stocks to buy now according to hedge funds include Newmont Corporation (NYSE:NEM), Teck Resources Limited (NYSE:TECK), and Albemarle Corporation (NYSE:ALB), among others discussed in detail below.
Our Methodology
These were picked based on the strength of their earnings and the durability of their fundamentals as the prices of base metals and minerals skyrocket across the world due to an increase in demand and supply chain disruptions. Hedge fund sentiment was a key classifier in the final selection.
The hedge fund sentiment around each stock was calculated using the data of 873 hedge funds tracked by Insider Monkey.
Why pay attention to hedge fund holdings? Insider Monkey’s research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 86 percentage points since March 2017. Between March 2017 and July 2021 our monthly newsletter’s stock picks returned 186.1%, vs. 100.1% for the SPY. Our stock picks outperformed the market by more than 86 percentage points (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to. You can subscribe to our free newsletter on our homepage to receive our stories in your inbox.
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Best Mineral Stocks To Buy Now
10. Northern Dynasty Minerals Ltd. (NYSE:NAK)
Number of Hedge Fund Holders: 6
Northern Dynasty Minerals Ltd. (NYSE:NAK) is a diversified metals and mining firm that explores mineral properties. The core interests of the firm lie in copper, gold, and molybdenum. One of the premier projects of the company is in southern Alaska. The project covers an area of 417 square miles. The area contains more than 2,400 mineral claims. The firm has a market cap of $225 million and was founded in 1983.
Northern Dynasty Minerals Ltd. (NYSE:NAK) is also pursuing the development of the Pebble mine project in Alaska, which the firm says could be worth $500 billion. However, environmental activists have moved the court against the development of the area.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm Kopernik Global Investors is a leading shareholder in Northern Dynasty Minerals Ltd. (NYSE:NAK) with 27 million shares worth more than $13 million.
At the end of the first quarter of 2021, 6 hedge funds in the database of Insider Monkey held stakes worth $14 million in Northern Dynasty Minerals Ltd. (NYSE:NAK), up from 4 in the previous quarter worth $17 million.
Just like Newmont Corporation (NYSE:NEM), Teck Resources Limited (NYSE:TECK), and Albemarle Corporation (NYSE:ALB), Northern Dynasty Minerals Ltd. (NYSE:NAK) is one of the stocks that is attracting the attention of elite investors.
9. Turquoise Hill Resources Ltd. (NYSE:TRQ)
Number of Hedge Fund Holders: 11
Turquoise Hill Resources Ltd. (NYSE:TRQ) is a mining company with interests in copper, gold, silver, and other minerals. The company is developing the Oyu Tolgoi copper-gold mine, one of the largest mines of its kind in the world, located in Mongolia. It recently revealed that the funding requirement for the project had gone up to $3.6 billion, up from $2.4 billion before, after delays in underground mining. The project has started production though.
Turquoise Hill Resources Ltd. (NYSE:TRQ) recently posted earnings for the third quarter, reporting a revenue of $622 million, up more than 135% compared to the revenue over the same period last year.
At the end of the first quarter of 2021, 11 hedge funds in the database of Insider Monkey held stakes worth $620 million in Turquoise Hill Resources Ltd. (NYSE:TRQ).
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm Pentwater Capital Management is a leading shareholder in Turquoise Hill Resources Ltd. (NYSE:TRQ) with 19 million shares worth more than $321 million.
8. Hudbay Minerals Inc. (NYSE:HBM)
Number of Hedge Fund Holders: 12
Hudbay Minerals Inc. (NYSE:HBM) is a Canadian mining firm that produces copper, gold, silver, molybdenum, and zinc. It is presently working on projects in Manitoba, Saskatchewan, Canada, Peru, Arizona and Nevada. The firm recently beat market estimates on earnings per share by $0.11 in the third quarter. It has also benefited from the rise in copper and gold prices in recent months as inflation fears dog the marketplace in the US.
National Bank analyst Shane Nagle recently upgraded Hudbay Minerals Inc. (NYSE:HBM) stock to Outperform from Sector Perform with a price target of C$12.5, underlining that tax reforms were unlikely to affect the fiscal stability of the company in the coming months.
Among the hedge funds being tracked by Insider Monkey, Atlanta-based investment firm GMT Capital is a leading shareholder in Hudbay Minerals Inc. (NYSE:HBM) with 26 million shares worth more than $151 million.
At the end of the first quarter of 2021, 12 hedge funds in the database of Insider Monkey held stakes worth $310 million in Hudbay Minerals Inc. (NYSE:HBM).
7. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holders: 21
Rio Tinto Group (NYSE:RIO) explores and processes mineral resources around the world. Some of the projects the firm is presently involved in include the mining and extraction of aluminum, copper, diamond, gold, borates, salt, iron ore, and uranium, among others. Labor shortages in Australia have forced the company to lower iron ore shipment guidance for 2021, but a jump in prices has helped offset some of the setback from this decision.
Morgan Stanley analyst Alain Gabriel recently raised the price target on Rio Tinto Group (NYSE:RIO) stock to GBP 4,880 from GBP 4,750, maintaining an Equal Weight rating on the shares.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Rio Tinto Group (NYSE:RIO) with 12.9 million shares worth more than $1 billion.
At the end of the first quarter of 2021, 21 hedge funds in the database of Insider Monkey held stakes worth $1.4 billion in Rio Tinto Group (NYSE:RIO), down from 25 in the previous quarter worth $1.5 billion.
6. Southern Copper Corporation (NYSE:SCCO)
Number of Hedge Fund Holders: 23
Southern Copper Corporation (NYSE:SCCO) is an Arizona-based mining firm with core interests in copper deposits, although it also deals in silver, gold, and other minerals. The stock posted strong gains through October as the prices of copper climbed to record highs amid increased demand and miners cut production to benefit from this boom.
Southern Copper Corporation (NYSE:SCCO) stock has recently earned upgrades from HSBC and Barclays. The latter has an Equal Weight rating on the shares with a price target of $55, compared to a Hold rating and a price target of $68.5 of the former.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in Southern Copper Corporation (NYSE:SCCO) with 3.8 million shares worth more than $245 million.
At the end of the first quarter of 2021, 23 hedge funds in the database of Insider Monkey held stakes worth $552 million in Southern Copper Corporation (NYSE:SCCO), down from 27 in the previous quarter worth $589 million.
Alongside Newmont Corporation (NYSE:NEM), Teck Resources Limited (NYSE:TECK), and Albemarle Corporation (NYSE:ALB), Southern Copper Corporation (NYSE:SCCO) is one of the stocks that hedge funds are buying.
5. BHP Group (NYSE:BHP)
Number of Hedge Fund Holders: 24
BHP Group (NYSE:BHP) is an Australian natural resources firm. It engages in the petroleum, copper, iron ore, and coal business. On November 7, merely weeks after the board of the firm approved a climate change plan that envisions net zero emissions by 2050 for suppliers and shippers, the company revealed that it had agreed to sell 80% of its stake in two Australian coal mines in a deal worth $1.35 billion.
The move will help the BHP Group (NYSE:BHP) significantly reduce the carbon footprint of the company. Deutsche Bank analyst Liam Fitzpatrick recently termed the stock a Catalyst Buy Call as energy stocks extended a strong rally.
Among the hedge funds being tracked by Insider Monkey, Washington-based investment firm Fisher Asset Management is a leading shareholder in BHP Group (NYSE:BHP) with 8 million shares worth more than $594 million.
In its Q1 2021 investor letter, Harding Loevner, an asset management firm, highlighted a few stocks and BHP Group (NYSE:BHP) was one of them. Here is what the fund said:
“Our purchase of Australian mining company BHP is an example of a quality company at a moderate valuation that should deliver attractive long-term returns. We believe the market has undervalued its enduring competitive advantage due to its low cost iron and copper mining operations which has allowed the company to deliver consistent profits and cash flows across the inevitable ups and downs of the global metals cycle. While the variability of commodity prices prevents BHP from scoring in the top ranks of measured quality, we are willing to bear some of that uncertainty in return for a more attractive valuation given the company’s strong business fundamentals.”
4. Vale S.A. (NYSE:VALE)
Number of Hedge Fund Holders: 27
Vale S.A. (NYSE:VALE) is a Brazilian mining firm primarily engaged in the iron business. The company recently sold a sizable stake in Mosaic, a crop nutrients firm that more than doubled in value over the past few months amid an increase in fertilizer prices, for $1.26 billion. The company said that the sale reflected a strategic choice to focus capital allocation towards the core business.
After posting healthy gains in the past few months, Vale S.A. (NYSE:VALE) has dipped in recent weeks after China moved to crackdown on the minerals and energy industry in the country. However, the firm still posted a 17% year-on-year gain in revenue for the third quarter.
Among the hedge funds being tracked by Insider Monkey, Florida-based investment firm GQG Partners is a leading shareholder in Vale S.A. (NYSE:VALE) with 43 million shares worth more than $998 million.
3. Albemarle Corporation (NYSE:ALB)
Number of Hedge Fund Holders: 28
Albemarle Corporation (NYSE:ALB) develops and markets specialty chemicals that include lithium compounds, an important commodity in the world economy as EV adoption accelerates. The company recently posted earnings for the third quarter, reporting earnings per share of $1.05, beating market predictions by $0.28. The revenue over the period was $830 million, smashing estimates by $66 million.
Analysts are also bullish on Albemarle Corporation (NYSE:ALB) stock, with Bank of America, Mizuho, and Oppenheimer all raising the targets on the shares recently. The company has also boosted guidance for the fiscal year as lithium demand skyrockets.
At the end of the second quarter of 2021, 28 hedge funds in the database of Insider Monkey held stakes worth $165 million in Albemarle Corporation (NYSE:ALB), down from 31 the preceding quarter worth $262 million.
2. Teck Resources Limited (NYSE:TECK)
Number of Hedge Fund Holders: 40
Teck Resources Limited (NYSE:TECK) is a diversified metals and mining firm. The rise in coal prices over the past few weeks, in part due to increased demand that outstrips production, has benefited the stock. The company recently posted record-shattering earnings results, beating estimates on earnings per share by C$0.39 and on revenue by $330 million. It has also recently signed a $4 billion revolving credit facility linked to sustainability that will mature in 2026.
On October 28, investment advisory BMO Capital maintained an Outperform rating on Teck Resources Limited (NYSE:TECK) stock and raised the price target to C$54 from C$50. Jackie Przybyłowski, an analyst at the advisory, issued the ratings update.
Among the hedge funds being tracked by Insider Monkey, United Kingdom-based investment firm Contrarius Investment Management is a leading shareholder in Teck Resources Limited (NYSE:TECK) with 7.3 million shares worth more than $170 million.
1. Newmont Corporation (NYSE:NEM)
Number of Hedge Fund Holders: 55
Newmont Corporation (NYSE:NEM) is a Colorado-based mining firm that has interests in gold, copper, silver, zinc, and lead. It operates in several countries around the world, including the United States, Canada, Mexico, Peru, Argentina, Australia, and Ghana, among others. The firm had proven gold reserves of 94 million ounces at the end of 2020. As gold prices climb above $1800/oz for the first time in two months, the stock has soared.
Newmont Corporation (NYSE:NEM) has solid fundamentals and an impressive dividend history. In late October, the firm declared a quarterly dividend of $0.55 per share, in line with previous. The forward yield was 3.8%.
At the end of the second quarter of 2021, 55 hedge funds in the database of Insider Monkey held stakes worth $1.2 billion in Newmont Corporation (NYSE:NEM), up from 43 in the preceding quarter worth $994 million.
In its Q1 2020 investor letter, First Eagle Investment Management, an asset management firm, highlighted a few stocks and Newmont Corporation (NYSE:NEM) was one of them. Here is what the fund said:
“The gold price helped support the stock price of Newmont Corporation, a Colorado-based miner with, in our view, highquality assets located in favorable mining jurisdictions in North America, South America, Australia and Africa. With what we consider an impressive portfolio of assets, strong management team, solid balance sheet and history of generating free cash flow, Newmont appears well positioned to withstand the economic disruptions related to the coronavirus pandemic.”
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Disclosure. None. 10 Best Mineral Stocks To Buy Now is originally published on Insider Monkey.
