In this article, we will discuss the Top 10 Materials Stocks to Buy According to Analysts.
Materials stocks are shares of companies that produce or supply raw materials, including metals, chemicals, and construction supplies. These stocks typically rise or fall in response to industrial demand for materials used in manufacturing, construction, and emerging technologies.
The materials sector is experiencing a notable resurgence in 2025 following several challenging years. In the past six months alone (as of July 3, 2025), the S&P 500 Materials index has gained 8.78%, outpacing the broader S&P 500’s 6.76% return. This marks the first time in two years that the Materials index is outperforming the broad market.
Analysts had identified compelling opportunities within the sector well before this turnaround materialized. Fidelity analysts projected a “bullish long-term story” for the materials sector in 2025 and beyond, while McKinsey emphasized that the ongoing energy transition is fundamentally reshaping the materials landscape. McKinsey outlined three major shifts: rising demand for materials embedded in low-carbon technologies, a shift in demand toward metals like lithium, copper, and nickel, and a decline in thermal coal’s role in the energy system.
Sector-specific dynamics further reinforce the investment thesis. Analysts are most optimistic about the Basic Materials subsector, supported by improving market conditions. According to Morningstar analysts, lithium—a key material driving the electric vehicle revolution—reached multi-year lows in 2024 “as supply grew faster than demand in 2023 and 2024.” However, the analysts note that “demand continues to increase from higher global electric vehicle sales and the buildout of utility-scale batteries used in energy storage systems.” They forecast higher prices in the near term as supply cuts move the market closer to balance, particularly in the second half of 2025.
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Our Methodology
To identify the top 10 materials stocks favored by analysts, we compiled the initial pool of materials companies by analyzing sector-specific ETF holdings and established industry rankings. Our selection criteria focused on companies with favorable analyst coverage. To enhance our analysis, we incorporated hedge fund sentiment as a key validation metric, utilizing institutional holding data from Insider Monkey’s database as of Q1 2025. The final list prioritizes stocks based on their average upside potential, measured as of July 7, 2025.
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).
Top 10 Materials Stocks to Buy According to Analysts
10. Newmont Corporation (NYSE:NEM)
Average Upside Potential as of July 7: 9.17%
Number of Hedge Fund Holders: 65
Newmont Corporation (NYSE:NEM) is one of the top 10 materials stocks to buy according to analysts. On July 3, the company’s “Buy” rating was reaffirmed at UBS. UBS also raised the price target for Newmont’s stock to $68 from $60.
According to UBS, gold prices have “repeatedly reached new highs this year.” They stated that, at one point, the prices surpassed $3,500 per ounce, marking an almost 30% increase since the beginning of the year. This surge in gold prices, amidst an “uncertain trade war outlook and escalating concerns about an economic recession,” is noted as a significant opportunity for investors in gold mining stocks like Newmont.
UBS analysts also touched on Newmont’s financial performance. They noted that the company reported strong Q1 FY2025 earnings, with earnings per share (EPS) of $1.25, significantly exceeding analysts’ consensus estimates of $0.71. The analysts also noted that the company is on track to meet its 2025 guidance, with the first-quarter results aligning with the indications provided in February 2025.
Newmont Corporation (NYSE:NEM), one of the world’s largest gold mining companies, operates across five continents and is a producer of copper, silver, zinc, and lead. Its flagship assets include Boddington in Australia and Yanacocha in Peru. The company plays a vital role in supplying metals essential for global electrification and infrastructure. Some of Newmont’s standout aspects include its large-scale operations, strong cash generation, and strategic diversification across multiple geographies and commodities.
9. The Sherwin-Williams Company (NYSE:SHW)
Average Upside Potential as of July 7: 10.11%
Number of Hedge Fund Holders: 68
The Sherwin-Williams Company (NYSE:SHW) is one of the top 10 materials stocks to buy according to analysts. On June 13, Citi lowered its rating on Sherwin-Williams stock from Buy to Neutral, citing concerns about the housing market’s future prospects. The firm also reduced its price target from $405.00 to $385.00.
Citi analysts pointed to “sustained pressure from elevated mortgage rates” as a significant factor. They also cited “delayed expectations for Federal Reserve rate cuts,” which are “dampening hopes for a meaningful housing recovery in the second half of 2025.” The firm noted suppressed housing dynamics, including sluggish existing home sales and a challenging environment for homebuilders, indicating few signs of a market recovery in the latter half of the year.
While the analysts acknowledge Sherwin-Williams as a strong long-term player with solid market share potential and view its long-term market share growth story as intact, they believe current conditions suggest limited upside in the short term. As such, the firm stated that without clear near-term catalysts, the stock’s risk-reward profile is less compelling. The research note suggested that investors wait for a better entry point before purchasing Sherwin-Williams shares.
The Sherwin-Williams Company (NYSE:SHW) develops, manufactures, and sells paints, coatings, and related products to professional, industrial, commercial, and retail customers. With operations across the Americas, Europe, Asia, and Australia, it serves markets through brands like Valspar and its own Sherwin-Williams stores. Analysts favor the company for its scale, global reach, and consistent dividend growth, having raised its payout for 48 consecutive years.