Dear Valued Visitor,

We have noticed that you are using an ad blocker software.

Although advertisements on the web pages may degrade your experience, our business certainly depends on them and we can only keep providing you high-quality research based articles as long as we can display ads on our pages.

To view this article, you can disable your ad blocker and refresh this page or simply login.

We only allow registered users to use ad blockers. You can sign up for free by clicking here or you can login if you are already a member.

Vale SA (ADR) (VALE), Archer Daniels Midland Company (ADM): Copper, Iron, Fertilizer, and Food Companies Poised to Grow

Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you’d like to add some global natural resources stocks to your portfolio, but don’t have the time or expertise to handpick a few, the SPDR S&P Global Natural Resources ETF could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The SPDR ETF’s expense ratio — its annual fee — is a relatively low 0.40%, and it recently yielded close to 2%.

This ETF is too young to have a sufficient track record to assess. (It has underperformed the world market over the past year.) As with most investments, of course, we can’t expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why global natural resources?
Our global economic slump won’t last forever, and there are already signs of life here and there. Thus, companies specializing in global natural resources are poised to prosper as construction and infrastructure projects get under way, and manufacturing kicks into a higher gear. And food-related companies can rely on our planet’s continually growing population.

Archer Daniels Midland Company (NYSE:ADM)More than a handful of global natural resources companies had strong performances over the past year. Archer Daniels Midland Company (NYSE:ADM) jumped 33%, with its last quarter featuring revenue slightly up, but earnings down, in part due to last year’s droughts. The company remains a solid dividend payer, though, and is looking to expand in Asia via its purchase of GrainCorp, Australia’s leading agribusiness. ADM is considering selling its cocoa business, amid falling cocoa prices and shrinking margins.

Other companies didn’t do as well last year, but could see their fortunes change in the coming years. Brazil-based Vale SA (ADR) (NYSE:VALE), the world’s largest iron-ore concern, fell 22%. Its 5.6% dividend yield is appealing, as is its forward P/E near 7, about half of its five-year average of 14. The stock looks undervalued to many, though some are not convinced, sensing continued pressure on commodity prices. Vale has been tackling soft demand by cutting its costs, and its CEO is focused on disciplined capital spending. Protests in Brazil aren’t helping matters, as some call for improved infrastructure and services instead of massive spending on upcoming Olympics and World Cup games.

Fertilizer giant Potash Corp./Saskatchewan (USA) (NYSE:POT) dropped 15% and yields 3.5%. (Its dividend has been hiked 25% this year and some 700% over the past few years.) With its current and forward P/E ratios well below its five-year average, the stock looks interesting. Bulls like its low-cost structure and solid profit margins. Some of its fate is tied to massive developing economies, such as China, where growth has slowed, and India, where there is reportedly a potash oversupply.

DOWNLOAD FREE REPORT: Warren Buffett's Best Stock Picks

Let Warren Buffett, George Soros, Steve Cohen, and Daniel Loeb WORK FOR YOU.

If you want to beat the low cost index funds by 19 percentage points per year, look no further than our monthly newsletter.In this free report you can find an in-depth analysis of the performance of Warren Buffett's entire historical stock picks. We uncovered Warren Buffett's Best Stock Picks and a way to for Buffett to improve his returns by more than 4 percentage points per year.

Bonus Biotech Stock Pick: You can also find a detailed bonus biotech stock pick that we expect to return more than 50% within 12 months.
Subscribe me to Insider Monkey's Free Daily Newsletter
This is a FREE report from Insider Monkey. Credit Card is NOT required.