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11 Best Metal Stocks to Invest In

In this article, we will be taking a look at the 11 best metal stocks to invest in. To skip our detailed analysis of these stocks and the metals sector, you can go directly to see the 5 Best Metal Stocks to Invest In.

Metals and precious metals have been on the rise as far as prices are concerned since the start of 2022. One of the main reasons for the rise is the Russian invasion of Ukraine, causing disruptions in global markets for critical raw materials including a variety of metals such as nickel and stainless steel. As a result, the World Bank’s Metals and Minerals Price Index rose by 13% in the first quarter of 2022, according to a Commodity Markets Outlook Report published by the World Bank this April. Similarly, the bank’s Precious Metals Index gained 4% over the same period. Both the rises were driven by a higher demand in investment when it came to metals and precious metals. This increase in demand was seen to be directly related to the Russian-Ukrainian crisis.

As a result of the above, stocks such as the Rio Tinto Group (NYSE:RIO), Wheaton Precious Metals Corp. (NYSE:WPM), and Steel Dynamics, Inc. (NASDAQ:STLD), among others, have been benefitting from increasing popularity in investment circles. The World Bank expects metal prices to rise by a further 16% in 2022, while precious metals are expected to see a slight rise in prices as well.

Aluminum, copper, nickel, and tin prices were seen to reach historically high levels in March 2022. Higher energy costs causing production constraints also contributed to these developments. Individually, iron ore, aluminum, nickel, tin, and zinc prices rose by 27%, 18%, 35%, 12%, and 11%, respectively.

Photo by Russ Ward on Unsplash

Let’s now take a look at the 11 best metal stocks to invest in.

Our Methodology

We have selected metals stocks that have recently been performing well in the sector, based on factors such as projected growth rates in their EPS, revenue, and free cash flow, alongside positive news driving up share prices and the latest earnings results. The stocks are highly popular among hedge funds and analysts alike, based on Insider Monkey’s hedge fund data for the second quarter and analysts’ ratings and price targets over the past three months. They are ranked based on the number of hedge funds holding stakes in them, from the lowest to the highest.

Best Metal Stocks to Invest In

11. ArcelorMittal (NYSE:MT)

Number of Hedge Fund Holders: 20

ArcelorMittal (NYSE:MT) operates integrated steel and mining companies in Europe, North and South America, Asia, and Africa. The company’s metal products include semi-finished flat products such as slabs, hot and cold-rolled coils and sheets, tinplates, and color-coated coils. It is based in Luxembourg City, Luxembourg.

Deutsche Bank’s Bastian Synagowitz holds a Buy rating on shares of ArcelorMittal (NYSE:MT) as of October 7.

This August, ArcelorMittal (NYSE:MT) commented that it sees Brazilian steel consumption doubling within a decade in light of rising demand for more infrastructure. The company is thus investing about $3.9 billion in Brazil with almost 40% intended to expand production capacity by 2024. In the second quarter, ArcelorMittal’s (NYSE:MT) EPS was $4.24, beating estimates by $0.34, and its revenue was $22.14 billion, also beating estimates by $393.35 million.

ArcelorMittal (NYSE:MT) was found among the 13F holdings of 20 hedge funds in the second quarter. Their total stake value was $640 million. GQG Partners was the largest stakeholder in the company, holding 11.2 million shares worth about $254 million.

Voss Capital, an investment management firm, mentioned ArcelorMittal (NYSE:MT) in its fourth-quarter 2021 investor letter. Here’s what the firm said:

ArcelorMittal is a global integrated steel producer trading at around 2x EBITDA which will likely generate over 50% of their market cap in free cash flow in the next 8-10 quarters. This is after a period of substantial deleveraging which now allows the company to use FCF primarily towards share buybacks. We also believe the company’s numerous joint ventures have an underappreciated $10+ billion of value. When accounting for this, we believe MT is even cheaper on a price/tangible book basis (~0.4x).

If the company can simply maintain its multiple while returning most, if not all, that FCF to shareholders in the form of buybacks, we believe 50%+ upside is conservative. Given the company’s deleveraged balance sheet, even if steel pricing and profitability decline materially, we believe the downside will be limited as historically MT trades in a range of 5-7x EBITDA versus the current 2x. “

ArcelorMittal (NYSE:MT), like Rio Tinto Group (NYSE:RIO), Wheaton Precious Metals Corp. (NYSE:WPM), and Steel Dynamics, Inc. (NASDAQ:STLD), is one of the top metal stocks elite hedge funds are eyeing this year.

10. Commercial Metals Company (NYSE:CMC)

Number of Hedge Fund Holders: 21

Commercial Metals Company (NYSE:CMC) works to manufacture, recycle, and fabricate steel and metal products. It also offers related materials and services in the US, Poland, China, and internationally. The company sells ferrous and nonferrous scrap metals to steel mills, foundries, aluminum sheet and ingot manufacturers, brass and bronze ingot makers, and other consumers.

David Gagliano at BMO Capital holds a Market Perform rating on shares of Commercial Metals Company (NYSE:CMC) as of October 14. The analyst also raised his price target on the stock from $37 to $43.

This October, Commercial Metals Company (NYSE:CMC) raised its quarterly dividend by 14.3%, bringing it up to $0.16 per share. Over the past five years, the company’s dividend had a compound annual growth rate of 3.13%. Analysts at Citigroup such as Alexander Hacking foresee Commercial Metals Company’s (NYSE:CMC) 2023 earnings results to remain very strong after the company beat fourth-quarter estimates.

There were 21 hedge funds long Commercial Metals Company (NYSE:CMC) in the second quarter, with a total stake value of $301 million.

Fairholme Capital Management, an investment management company, mentioned Commercial Metals Company (NYSE:CMC) in its half-year 2022 investor letter. Here’s what the firm said:

Commercial Metals Company (NYSE:CMC) recycles scrap into rebar essential for the strengthening of concrete found everywhere. CMC is priced at five times estimated earnings and pays a 1.6% dividend that I expect to grow with profits. To better understand the Fund’s recent infrastructure investments, I recommend Vaclav Smil’s How the World Really Works.”

9. Nucor Corporation (NYSE:NUE)

Number of Hedge Fund Holders: 22

Nucor Corporation (NYSE:NUE) is a manufacturer of steel and steel products. It produces hot-rolled, cold-rolled, and galvanized sheet steel products, plate steel products, wide-flange beams, beam blanks, and H-piling and sheet piling products, among more. The company is based in Charlotte, North Carolina.

An Outperform rating was reiterated on shares of Nucor Corporation (NYSE:NUE) on September 16 by analyst Curt Woodworth at Credit Suisse. The analyst also placed a $140 price target on the stock.

Nucor Corporation (NYSE:NUE) declared a $0.5 per share quarterly dividend this September and boasts consistent dividend growth over the past 48 years. In the second quarter, Nucor Corporation (NYSE:NUE) had an EPS of $9.67, beating estimates by $0.91, and its revenue was $11.79 billion, also beating estimates by $205.54 million.

Our hedge fund data shows 22 hedge funds long Nucor Corporation (NYSE:NUE) in the second quarter, and 26 hedge funds long the stock in the previous quarter. Their total stake values were $260 million and $186 million, respectively.

8. MP Materials Corp. (NYSE:MP)

Number of Hedge Fund Holders: 25

MP Materials Corp. (NYSE:MP) is a diversified metals and mining company operating rare earth mining and processing facilities. The company owns and operates the Mountain Pass Rare Earth mine in the Western Hemisphere. It also holds mineral rights to the Mountain Pass mine and surrounding areas.

Canaccord’s George Gianarikas holds a Buy rating on shares of MP Materials Corp. (NYSE:MP) as of September 28. The analyst also placed a $40 price target on the stock.

This August, MP Materials Corp. (NYSE:MP) posted its second-quarter adjusted earnings which showed its revenues nearly doubling to $143 million. The company’s earnings benefitted from a 90% rise in the prices of rare earth materials used to make electric vehicles. MP Materials Corp.’s (NYSE:MP) net income almost tripled to $73.3 million from $27.2 million in the year-earlier quarter.

JHL Capital Group was the largest stakeholder in MP Materials Corp. (NYSE:MP) in the second quarter, out of 25 hedge funds long the stock. It held 38.2 million shares in the company worth $1.2 billion, out of the total stake value of $3.5 billion.

Bernzott Capital Advisors, an investment management firm, mentioned MP Materials Corp. (NYSE:MP) in its first quarter 2022 investor letter. Here’s what the firm said:

MP Materials (NYSE:MP): This rare earth specialty materials company reported solid earnings driven by higher production and selling prices of neodymium-praseodymium (NdPr), a vital component for the development of magnets used in EV production, wind turbines, drones, robotics, and other industrial applications. Also contributing were offtake agreements with General Motors for magnets and expansion plans for domestic production of magnets making MP the only domestic producer. The balance sheet and cash flow generation remain strong, supportive of expansion plans in the current NdPr pricing environment.”

7. Rio Tinto Group (NYSE:RIO)

Number of Hedge Fund Holders: 26

Rio Tinto Group (NYSE:RIO) is another diversified metals and mining company on our list, working to explore, mine, and process mineral resources across the globe. The company offers aluminum, copper, diamonds, gold, borates, titanium dioxide, salt, iron ore, and lithium. It is based in London, United Kingdom.

Liam Fitzpatrick has a Hold rating on shares of Rio Tinto Group (NYSE:RIO) as of October 5.

Rio Tinto Group’s (NYSE:RIO) has a dividend yield of 12.48% as of October 19. The company’s dividend also has a five-year compound annual growth rate of 23.65%. This October, Rio Tinto Group (NYSE:RIO) announced a new partnership with Voltalia, an international energy company, to receive renewable solar power for its titanium-producer Richards Bay Minerals.

In total, there were 26 hedge funds long Rio Tinto Group (NYSE:RIO) in the second quarter, compared to 22 hedge funds in the previous quarter. Their total stake values were $2.5 billion and $1.8 billion, respectively.

6. Wheaton Precious Metals Corp. (NYSE:WPM)

Number of Hedge Fund Holders: 28

Wheaton Precious Metals Corp. (NYSE:WPM) sells precious metals in Canada and across the globe. The company sells gold, silver, palladium, and cobalt deposits, and owns a portfolio of interests in 23 operating mines and 13 development projects. It is based in Vancouver, Canada.

An Outperform rating was reiterated on shares of Wheaton Precious Metals Corp. (NYSE:WPM) on October 13, by analyst John Sclodnick at National Bank.

On September 12, Wheaton Precious Metals Corp. (NYSE:WPM) gained 2.3% in pre-market trading in light of a Buy rating being placed on the stock by Goldman Sachs. Over the next three to five years, the company’s EPS is expected to rise by 5%. Wheaton Precious Metals Corp. (NYSE:WPM) also brought in revenue of $302.82 million and EPS of $0.33 in the second quarter, both beating estimates by $6.67 million and $0.01, respectively.

Out of 895 hedge funds tracked in the second quarter, 28 hedge funds were long Wheaton Precious Metals Corp. (NYSE:WPM). Their total stake value was $721 million. Of these funds, First Eagle Investment Management was the largest stakeholder in the company, holding 17 million shares worth $613 million.

Wheaton Precious Metals Corp. (NYSE:WPM), like Rio Tinto Group (NYSE:RIO), Wheaton Precious Metals Corp. (NYSE:WPM), and Steel Dynamics, Inc. (NASDAQ:STLD), is a highly attractive metal stocks many institutional investors are buying today.

Click to continue reading and see the 5 Best Metal Stocks to Invest In.

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Disclosure: None 11 Best Metal Stocks to Invest In is originally published on Insider Monkey.

AI, Tariffs, Nuclear Power: One Undervalued Stock Connects ALL the Dots (Before It Explodes!)

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The “Toll Booth” Operator of the AI Energy Boom

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