12 Best Basic Materials Stocks to Buy According to Analysts

2) Vale S.A. (NYSE:VALE)

Average Upside Potential: 47.8%

Number of Hedge Fund Holders: 41

Vale S.A. (NYSE:VALE) is engaged in producing and selling iron ore, iron ore pellets, nickel, and copper in Brazil and internationally. Analyst Caio Ribeiro from Bank of America Securities maintained a “Hold” rating on the company’s stock. The rating stems from a combination of factors related to the company’s recent performance and market conditions. As per the analyst, Vale S.A. (NYSE:VALE)’s production and sales numbers for iron ore remained largely in line with expectations, although they were marginally below the consensus estimates. Notably, iron ore production totaled 85.3 Mt in Q4 2024, 4.1 Mt lower YoY. Iron ore sales came in at 81.2 Mt, 9.1 Mt (-10%) lower YoY, due to the decision to reduce high-silica products sales in the quarter, improving all-in premiums.

Despite these numbers, the analyst believes that the realized prices for their products, mainly iron ore, exceeded expectations, which contributed positively to Vale S.A. (NYSE:VALE)’s earnings potential. The company’s strategic focus extends to its base metals business, an area where growth opportunities exist despite the recent challenges. With increasing global demand for EVs and renewable energy technologies, the broader long-term outlook for base metals such as nickel and copper is positive. Vale S.A. (NYSE:VALE)’s established presence in such markets places it well to capitalize on future demand growth.

White Falcon Capital Management, an investment fund manager, released its Q4 2024 investor letter and mentioned Vale S.A. (NYSE:VALE). Here is what the fund said:

“While this uncertainty in Brazil has prompted many investors to offload Brazilian stocks, we’ve taken advantage of this environment to establish a position in Vale S.A. (NYSE:VALE). Vale is among the world’s largest and lowest-cost iron ore producers and boasts a growing portfolio of high-demand copper and nickel assets. It is currently trading at a P/E of 5.3x with a 8% dividend yield.”