In this article, we will discuss the 10 Best Materials Stocks to Buy Right Now.
As the uncertainty about the US Presidential election faded, market experts are now looking for the sectors expected to benefit from the re-election of President Trump. Donald Trump’s policies on housing, targeting federal lands and reducing regulatory barriers, demonstrate ambitious plans to fuel construction and housing availability, reported Fastmarkets.
Trump’s stance on immigration might also impact the pallet sector. A fall in immigration and expected deportations might result in a tightening of the labor market and wage pressures. Therefore, Fastmarkets reported that there might be a reacceleration in wage growth. That being said, huge deportations might be restricted as business leaders can oppose these regulations due to expectations of labor shortages and higher costs. Therefore, any policy changes might be moderated.
BofA Remains Optimistic on Materials Sector- Here’s Why
Strategists at Bank of America are optimistic about the materials sector. This optimism stems from the expectation of an earnings rebound after the US Fed’s rate-cutting cycle in September. The strategists also pointed out significant underinvestment in manufacturing, including fields such as mining and equipment replacement. They believe that robust decarbonization goals are expected to aid metals, mining, and commodities.
The large bank also cited China’s stimulus program, highlighting that the materials sector had the highest correlation when it comes to the S&P 500’s 11 sectors to the MSCI China Index. Moreover, Wall Street experts opine that the return of Trump’s Presidency is expected to fuel growth momentum for construction, infrastructure, domestic manufacturing, and industrial sectors.
Montgomery Investment Management believes that Trump’s focus on rebuilding America’s infrastructure should result in elevated government spending, which should aid construction companies and materials suppliers. Also, policies that target bringing manufacturing jobs back to the U.S., such as tariffs on imported goods, should support domestic manufacturing companies.
READ ALSO: 7 Best Stocks to Buy For Long-Term and 8 Cheap Jim Cramer Stocks to Invest In.
US Construction Industry Has a Favourable Outlook
As per JLL, the US construction industry is well-placed for a year of measured growth and adaptation in 2025. The company believes that the push for green building practices from local governments and client directives, together with energy efficiency and lower carbon footprints, should continue to shape project requirements.
Also, improvements in the integration of advanced technologies including AI, IoT, and digital twins have been reshaping design, construction, and building management. This should provide opportunities for increased efficiency and value. JLL added that the US construction industry appears to be well-placed for growth and maintaining the right balance between short-term operational efficiency with long-term goals, while adapting to evolving organizational needs and technological advancements, remains crucial.
Amidst these developments, let us now have a look at the 10 Best Materials Stocks to Buy Right Now.
An aerial view of a factory specializing in the production of raw materials.
Our Methodology
To list the 10 Best Materials Stocks to Buy Right Now, we used a screener and sifted through several online rankings to extract the companies operating in the materials sector. Finally, the stocks were arranged in the ascending order of their average upside potential, as of November 14.
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 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
10 Best Materials Stocks to Buy Right Now
10) FMC Corporation (NYSE:FMC)
Average Upside Potential: 26.1%
FMC Corporation (NYSE:FMC) is an agricultural sciences company, that provides crop protection, plant health, and professional pest and turf management products.
FMC Corporation (NYSE:FMC)’s portfolio is aided by a strong research and development pipeline, which should continue to act as a key driver of its competitive edge in the agricultural sciences sector. Also, its growth strategy is dependent on its product innovation capabilities. The company continues to reduce leverage and improve credit ratings via disciplined cash management.
FMC Corporation (NYSE:FMC) highlighted that a sustainable cost reduction plan has been initiated, aiming for $50 million in savings, mainly via lower R&D spending. It is well-placed to meet higher demand with sufficient manufacturing capacity and stable raw material supplies. Overall, Wall Street analysts believe that FMC Corporation (NYSE:FMC)’s disciplined approach to cost management and innovation should fuel continued growth and shareholder value.
The company also expects raw material deflation and restructuring benefits to result in cost reductions in 2025. FMC Corporation (NYSE:FMC)’s focus on operational efficiency should aid margin expansion and profitability in the coming years. The planned divestiture of the company’s Global Specialty Solutions (GSS) business should yield several benefits. The proceeds might reduce its leverage and allow FMC Corporation (NYSE:FMC) to invest more aggressively in its core agricultural sciences business or pursue strategic acquisitions.
The reduction in leverage from the divestiture might improve the company’s financial ratios, resulting in a lower cost of capital. Analysts at Mizuho increased their price objective on shares of FMC Corporation (NYSE:FMC) from $64.00. to $70.00, giving a “Neutral” rating on 1st November.
9) Rio Tinto Group (NYSE:RIO)
Average Upside Potential: 30.9%
Rio Tinto Group (NYSE:RIO) is engaged in exploring, mining, and processing mineral resources.
Wall Street analysts are quite optimistic about Rio Tinto Group (NYSE:RIO)’s acquisition of Arcadium Lithium plc. This transaction should bring Arcadium’s complementary lithium business into Rio Tinto’s portfolio, establishing a global leader in energy transition commodities. Rio Tinto Group (NYSE:RIO) possesses the balance sheet strength and strong project delivery capability to execute and ramp up the full potential from Arcadium’s Tier 1 resource base.
Both Rio Tinto Group (NYSE:RIO) and Arcadium have complementary footprints and robust experience in Argentina and Quebec, in which the former plans to establish world-class lithium hubs with opportunities for sharing skillsets and reducing costs. The transaction provides compelling value, stemming from accelerating volume growth amidst the rising market resulting in significantly higher EBITDA and FCF in the outer years, before the expected synergies.
Rio Tinto Group (NYSE:RIO) remains committed to lithium production, in contrast to its 2 primary peers i.e., BHP Group and Glencore. As per S&P Global, Rio Tinto Group (NYSE:RIO) is the only major mining company that continues to invest significantly in lithium. The transaction is a testament that the company is focused on the long-term prospect of lithium and the EV transition, despite the current lithium market oversupply and a slowdown in EV uptake in western markets.
As per Wall Street analysts, the shares of Rio Tinto Group (NYSE:RIO) have an average price target of $81.69.
8) Eldorado Gold Corporation (NYSE:EGO)
Average Upside Potential: 31.7%
Eldorado Gold Corporation (NYSE:EGO) is engaged in the mining, exploration, development, and sale of mineral products mainly in Turkey, Canada, Greece, and Romania.
Wall Street analysts are quite optimistic about Olympias, which is a gold-silver-lead-zinc mine located in the Halkidiki Peninsula in northern Greece. With respect to Olympias, Eldorado Gold Corporation (NYSE:EGO) successfully concluded the CBA negotiations and reached a mutually beneficial agreement with the union workforce. The 3-year agreement, together with higher productivity in its underground operations, supports the 650ktpa expansion. This reflects an increase from 500ktpa, placing Olympias for long-term profitability over the current mine life of 15 years.
In Canada, at Lamaque, progress continues on the Ormaque bulk sample. Eldorado Gold Corporation (NYSE:EGO) started stockpiling material ahead of processing it through the mill in Q4 2024 and remains on track to declare an inaugural reserve later this year. The analysts believe that the company’s long-term growth is expected to be aided by its Skouries project.
Eldorado Gold Corporation (NYSE:EGO) highlighted that Skouries project remains on budget and on schedule. The first production is expected in Q3 2025. Notably, strong progress was made during Q3 2024, with overall project completion currently sitting at 79%. Also, the contract was received for the steel and mechanical installations for the filter building during Q3 2024. In 2024, the expected capital spend was lowered to between $350 million – $380 million from the original guidance of $375 million and $425 million for the Skouries project.
Eldorado Gold Corporation (NYSE:EGO) mentioned that the first production of the copper-gold concentrate is anticipated in Q3 2025, with expected 2025 gold production of between 50,000 to 60,000 ounces and copper production of between 15 to 20 million pounds. The project is on track for commercial production at 2025 end.
CIBC increased the target price on the shares of Eldorado Gold Corporation (NYSE:EGO) from $18.00 to $22.50, giving an “Outperform” rating on 10th July.