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.
7) Freeport-McMoRan Inc. (NYSE:FCX)
Average Upside Potential: 32.5%
Freeport-McMoRan Inc. (NYSE:FCX) is engaged in the mining of mineral properties in North America, South America, and Indonesia.
Freeport-McMoRan Inc. (NYSE:FCX)’s Grasberg mine in Indonesia is renowned for its substantial copper and gold reserves. Market experts believe that the potential 20-year extension of operations at the Grasberg mine reflects a healthy opportunity for Freeport-McMoRan Inc. (NYSE:FCX). Grasberg has been tagged as one of the world’s largest copper and gold mines. This means that securing its long-term future should result in a stable production base and cash flow stream for the company.
Freeport-McMoRan Inc. (NYSE:FCX)’s position in the copper market remains a key differentiator. Wall Street experts believe that this should benefit the company from a positive supply/demand/pricing outlook for copper, fueled by global trends inclined towards decarbonization and electrification. These macro trends should sustain healthy demand for copper over the upcoming years, potentially aiding increased prices and benefiting major producers like Freeport-McMoRan Inc. (NYSE:FCX).
Furthermore, the company’s competitive advantage is strengthened by reserves and strategic assets. Freeport-McMoRan Inc. (NYSE:FCX)’s El Abra copper project in Chile reflects a significant growth opportunity. Also, the global shift towards renewable energy and EVs should fuel increased demand for copper, potentially aiding Freeport-McMoRan Inc. (NYSE:FCX)’s market position and profitability over the coming years.
Analysts at JPMorgan Chase & Co. upped their target price on the shares of Freeport-McMoRan Inc. (NYSE:FCX) from $53.00 to $55.00, giving a “Neutral” rating on 15th October.
6) Hudbay Minerals Inc. (NYSE:HBM)
Average Upside Potential: 34.3%
Hudbay Minerals Inc. (NYSE:HBM) is a diversified mining company, which is focused on the exploration, development, operation, and optimization of properties in North and South America.
Market experts opine that Hudbay Minerals Inc. (NYSE:HBM)’s diverse portfolio of assets, which span Canada and Peru, places the company well to capitalize on the increasing global demand for copper and gold. The company made significant strides in stabilizing and optimizing its operations. These efforts should result in improved throughput and set the stage for higher production. For example, Hudbay Minerals Inc. (NYSE:HBM) has successfully extended the life of its Constancia mine in Peru by 3 years to 2041. This extension reflects its ability to create ongoing value from the existing assets and provides a longer-term production outlook.
The company’s growth strategy revolves around the advancement of the Copper World project in Arizona. The Copper World project demonstrates a potential step-change for Hudbay Minerals Inc. (NYSE:HBM), providing significant copper production growth and value creation opportunities over the medium term. The company remains focused on pursuing a “3-P Plan” for Copper World, emphasizing Permits, a feasibility study Plan, and a Prudent financing strategy.
Hudbay Minerals Inc. (NYSE:HBM) is ramping up engineering studies in a bid to expand plant capacity earlier than previously planned. This hints at a proactive approach to maximizing the project’s potential.
Apart from Copper World, the company has been actively exploring expansion opportunities within its existing portfolio. Hudbay Minerals Inc. (NYSE:HBM) initiated its largest annual regional exploration program at Snow Lake, which highlights the potential for further resource discoveries and reserve growth throughout its asset base.
L1 Capital, an investment management firm, released its second quarter 2024 investor letter. Here is what the fund said:
“Hudbay Minerals Inc. (NYSE:HBM) (Long +31%) shares rallied over the quarter driven by rising copper and gold prices, as well as strong production results. The company’s first quarter results showed higher gold production and robust operating performance at both its major assets, which exceeded consensus expectations. In addition, the company announced a ~US$400m equity raise to support balance sheet de-leveraging and fund its key growth projects. Hudbay is a mid-tier mining company primarily producing copper, alongside gold and zinc, with its key assets located in Canada and Peru. We are attracted to Hudbay due to our positive medium-term outlook for copper and the company’s strong near-term free cash flow generation. This cash generation potential will allow the company to de-lever and recycle capital back into its highly prospective exploration program and major growth projects, most notably its Copper World project in Arizona.”
5) Ternium S.A. (NYSE:TX)
Average Upside Potential: 34.6%
Ternium S.A. (NYSE:TX) is engaged in manufacturing and distributing steel products in Mexico, Southern Region, Brazil, and internationally.
Ternium S.A. (NYSE:TX) is optimistic about future demand, mainly from the automotive and infrastructure sectors in its primary markets. Talking about developments, the expansion projects in Pesquería remain underway and a new pickling line and finishing center are expected to be operational in 2025-2026. Ternium S.A. (NYSE:TX) has a favorable outlook for Mexico’s industrial demand and North American steel market.
North America remains focused on moving towards low-carbon intensity steel production and the company has been investing to meet regional demands. Ternium S.A. (NYSE:TX) highlighted that government measures in Brazil and North America are targeting to reduce reliance on steel imports, which should support the company. It has been positioning itself for long-term growth with strategic investments in primary markets and renewable energy projects.
Ternium S.A. (NYSE:TX) continues to make significant investments in renewable energy and expansion projects. It expects a CapEx of between $1.7 billion – $1.8 billion for 2024, which will be focused on new facilities and a wind farm. Notably, the capital expenditure for 2025 is expected to be ~$2.3 billion, mainly for the Pesquería project. Following government reforms, Ternium S.A. (NYSE:TX) is optimistic about the long-term demand outlook in Argentina.
As per Wall Street, the shares of Ternium S.A. (NYSE:TX) have an average price target of $50.67.
4) Celanese Corporation (NYSE:CE)
Average Upside Potential: 35.2%
Celanese Corporation (NYSE:CE) is a chemical and specialty materials company, which manufactures and sells high-performance engineered polymers in the US and internationally.
Wall Street analysts are optimistic about Celanese Corporation (NYSE:CE)’s long-term potential as it remains focused on cost management and operational excellence. For 2025, the company focuses on 4 key things. These include cost reduction, delivering synergies, enhancing the Engineered Materials pipeline, and leveraging the Acetyl Chain. Celanese Corporation (NYSE:CE) targets to align production and inventory with demand and remains focused on free cash flow.
Industry experts believe that strong margins in the Acetyl Chain segment are expected to continue because of advantageous technology and cost structures. While Celanese Corporation (NYSE:CE) is facing a challenging environment, its commitment to operational excellence, cost management, and a healthy project pipeline should help it overcome this environment. The company focuses on reducing manufacturing costs through the end of 2024 by temporarily idling production facilities in every region and driving cash generation through an expected $200 million inventory release in Q4 2024.
Celanese Corporation (NYSE:CE) continues to focus on implementing additional cost reduction programs which should realize incremental savings greater than $75 million by 2025 end. The focus of these programs will be on driving productivity in selling, general, and administrative (SG&A) costs. Celanese Corporation (NYSE:CE) plans to efficiently and stringently deploy capital, and targets next year’s CapEx spending to be below 2024 levels.
As per Wall Street, the shares of Celanese Corporation (NYSE:CE) have an average price target of $113.25.
3) Newmont Corporation (NYSE:NEM)
Average Upside Potential: 40.1%
Newmont Corporation (NYSE:NEM) is engaged in the production and exploration of gold. The company also explores copper, silver, zinc, and lead.
Wall Street analysts believe that Newmont Corporation (NYSE:NEM)’s asset management strategy should act as a principal tailwind. The recent transactions consist of monetization of the Batu Hijau contingent payments as well as the sale of the Fruta del Norte stream credit facility. As per the experts, the divestment strategy should help the company accelerate deleveraging efforts and enhance cash returns to shareholders. The proceeds should result in share repurchases and debt reduction, potentially strengthening Newmont Corporation (NYSE:NEM)’s financial position.
Newmont Corporation (NYSE:NEM) also announced that it has agreed to sell the Telfer operation, Newmont’s 70% interest in the Havieron gold-copper project as well as other related interests in the Paterson region, all in Australia, to Greatland Gold plc. The company’s growth strategy also consists of leveraging synergies from the Newcrest acquisition and optimizing its portfolio with the help of strategic asset sales. These initiatives, together with operational improvements, should enhance Newmont Corporation (NYSE:NEM)’s competitive position and fuel long-term value creation.
While Newmont Corporation (NYSE:NEM) has been facing headwinds related to higher production costs and a slight reduction in long-term production targets, its focus on strategic divestitures and the successful execution of core projects should help it navigate the tough environment.
Analysts at Raymond James upped their price target on the shares of Newmont Corporation (NYSE:NEM) from $65.00 to $66.00, giving an “Outperform” rating on 25th October. L1 Capital, an investment management firm, released its Q2 2024 investor letter. Here is what the fund said:
“Newmont Corporation (NYSE:NEM) (Long +18%) shares outperformed as the company released its first quarter results where gold production exceeded consensus estimates. Newmont also sold a non-core gold asset for US$330m. This move is consistent with the company’s strategy to focus on execution at its large, low-cost and high free cash flow generative assets, while divesting smaller operations to simplify the portfolio. We became shareholders of Newmont following the acquisition of Newcrest in October 2023. With the recent share price rally, we exited the position and rotated into other gold equities where we see greater near-term upside potential.”
2) Vale S.A. (NYSE:VALE)
Average Upside Potential: 47.5%
Vale S.A. (NYSE:VALE) is engaged in producing and selling iron ore, iron ore pellets, nickel, and copper in Brazil and internationally.
Vale S.A. (NYSE:VALE) continues to implement a Value-Based Management (VBM) approach in a bid to optimize its operations and enhance shareholder value. The VBM vision demonstrates potential benefits to production and unit costs extending into 2028 and beyond. Wall Street analysts believe that such improvements should increase Vale S.A. (NYSE:VALE)’s net present value. The company’s strategic vision for 2030 focuses on a performance-driven culture, premium product portfolio, and stakeholder trust. Precisely, the company’s long-term growth should stem from cost optimization.
Vale S.A. (NYSE:VALE)’s management remains optimistic about its cost efficiency, targeting to reach sub-$20 cash costs by 2026, and it remains confident in the long-term potential of the nickel sector. It also plans to increase iron ore capacity to 350 million tons and further enhance copper production. Industry experts believe that Vale S.A. (NYSE:VALE) remains well-positioned to capitalize on any improvements in iron ore prices or higher global demand.
This means that elevated production volumes should result in economies of scale, potentially reducing per-unit costs and improving overall profitability. During increased demand or supply constraints from other producers, Vale S.A. (NYSE:VALE) can potentially capture a larger market share and benefit from price premiums.
In Q3 2024, the company’s operational and sales performance saw an improvement throughout the business segments. Notably, the iron ore shipments rose by 1.3 Mt (or 2%) YoY, courtesy of an 18% increase in pellet sales because of higher production and strong demand.
As per Wall Street analysts, the shares of Vale S.A. (NYSE:VALE) have an average price target of $15.39.
1) POSCO Holdings Inc. (NYSE:PKX)
Average Upside Potential: 65.7%
POSCO Holdings Inc. (NYSE:PKX) operates as an integrated steel producer in Korea and internationally.
Wall Street experts opine that POSCO Holdings Inc. (NYSE:PKX)’s strategic initiatives have placed it well to achieve a favorable growth outlook. These initiatives include a MoU with India’s JSW Group to develop a steel mill and collaborations in battery materials and renewable energy. In the Q3 2024 earnings call, POSCO Holdings Inc. (NYSE:PKX) also highlighted the completion of its Argentina Brine Lithium Phase 1 plant and ongoing restructuring efforts focused on improving financial stability.
Talking about the MoU with India’s JSW Group, POSCO Holdings Inc. (NYSE:PKX) initiated a joint project to construct an integrated steel mill with an annual capacity of 5 million tons as part of a global upstream investment priority strategy. Moreover, in the field of secondary battery materials, POSCO Holdings Inc. (NYSE:PKX) focuses on seeking business cooperation with JSW Group via joint investments and technology development along the secondary battery materials value chain.
POSCO Holdings Inc. (NYSE:PKX) aims for carbon neutrality by 2050, ahead of India’s 2070 target. The company highlighted that the completion of the Argentina Brine Lithium Phase 1 plant demonstrates progress in lithium production. POSCO Holdings Inc. (NYSE:PKX) continues to reflect resilience amidst fluctuating market conditions, and has been leveraging strategic partnerships and restructuring efforts to maintain financial stability and exploit future growth opportunities. With investments in Indian projects and lithium production, the company has been positioning itself to meet global demand.
While we acknowledge the potential of PKX as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for a deeply undervalued AI stock that is more promising than PKX but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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