In this article, we discuss the 5 best commodity stocks to buy on the dip. If you want to read about some more commodity stocks to buy on the dip, go directly to 11 Best Commodity Stocks To Buy on the Dip.
5. MP Materials Corp. (NYSE:MP)
Number of Hedge Fund Holders: 36
Loss in Share Price Over Past Six Months as of December 6: 19%
MP Materials Corp. (NYSE:MP) owns and operates rare earth mining and processing facilities. On September 27, MP Materials said that it was confident in the outlook for rare earth demand despite a recent pullback in prices. A rise in EV demand post-pandemic has led to increasing demand for rare earths, boosting the stocks of firms who mine rare earths.
On September 28, Canaccord analyst George Gianarikas maintained a Buy rating on MP Materials Corp. (NYSE:MP) stock and lowered the price target to $40 from $47, highlighting the value generation process of the firm was in stages 2 and 3 and it had rising strategic importance.
At the end of the third quarter of 2022, 36 hedge funds in the database of Insider Monkey held stakes worth $1.4 billion in MP Materials Corp. (NYSE:MP), compared to 26 in the previous quarter worth $1.98 billion.
In its Q3 2022 investor letter, ClearBridge Investments, an asset management firm, highlighted a few stocks and MP Materials Corp. (NYSE:MP) was one of them. Here is what the fund said:
“ClearBridge has visited and engaged with holding MP Materials Corp. (NYSE:MP), for example, a U.S. mining company with a facility that supplies neodymium and praseodymium, two rare earth minerals used to make powerful magnets found in 90% of EV motors. The facility recycles all water from its process such that recycled water meets 95% of the facility’s water needs, while the rest comes from groundwater. In the recycling process, wastewater is piped to an on-site water treatment plant where it is treated using reverse osmosis and then reused. In a recent engagement with the company, we encouraged it to disclose the groundwater extraction quantities that make up the other 5% and compare these to peers.”
4. Teck Resources Limited (NYSE:TECK)
Number of Hedge Fund Holders: 47
Loss in Share Price Over Past Six Months as of December 6: 18%
Teck Resources Limited (NYSE:TECK) engages in exploring, acquiring, developing, and producing natural resources in Asia, Europe, and North America. On October 14, Teck Resources revealed that it has agreed to deploy two electric tug boats at Neptune Terminal in Vancouver. The company will deploy tug boats in support of its climate goals. This will mark the first electric tugs operating in Canada as a full tugboat package for harbor assistance.
On November 1, Stifel analyst Alex Terentiew maintained a Buy rating on Teck Resources Limited (NYSE:TECK) stock and raised the price target to C$61 from C$58.
Among the hedge funds being tracked by Insider Monkey, New York-based firm Soroban Capital Partners is a leading shareholder in Teck Resources Limited (NYSE:TECK) with 12 million shares worth more than $366.7 million.
3. Bunge Limited (NYSE:BG)
Number of Hedge Fund Holders: 48
Loss in Share Price Over Past Six Months as of December 6: 17%
Bunge Limited (NYSE:BG) operates as an agribusiness and food company worldwide. On November 22, Bunge unveiled that it has signed a strategic partnership with France’s BZ Group. Bunge has acquired 49% of the business and the Beuzelin family remains the majority shareholder of BZ group with 51% shares. On November 15, Bunge declared a quarterly dividend of $0.65 per share, in line with the previous. The forward yield was 2.53%.
On October 24, BofA analyst Steve Byrne maintained a Buy rating on Bunge Limited (NYSE:BG) stock and lowered the price target to $130 from $138, noting that the agricultural cycle outlook remains quite strong amid the very tight crop supply/demand balance in the US and internationally.
At the end of the third quarter of 2022, 48 hedge funds in the database of Insider Monkey held stakes worth $763 million in Bunge Limited (NYSE:BG), compared to 48 in the previous quarter worth $729 million.
In its Q1 2022 investor letter, Old West Investment Management, an asset management firm, highlighted a few stocks and Bunge Limited (NYSE:BG) was one of them. Here is what the fund said:
“Bunge (pronounced BUN-GEE) Ltd (NYSE:BG) is one of the biggest agribusinesses and food companies in the world. Four worldwide companies dominate the sector, the others being Archer-Daniels-Midland Cargill and Dreyfuss. One of our favorite ways to screen for new ideas is following insider buying. When I saw Form 4 filed by new Bunge CEO Greg Heckman, his purchase of $9 million of BG stock intrigued me. My initial thought was the company gave him the stock as a signing bonus. I contacted BG Investor Relations and asked whether it was a signing bonus or did Heckman write a check for $9 million. IR assured me it was his own hard-earned money that he invested in the company he was about to run.
Heckman was a long-time executive at Conagra Foods who sensed an opportunity at BG. One of his first moves as CEO was to move the company’s HQ from New York to St. Louis, right in the middle of America’s breadbasket. BG had been plagued for years with poor decisions by underperforming management. Heckman’s decision to move to St. Louis was indicative of a no-nonsense style and he would commence cutting expenses and selling non-core assets…read more
2. Devon Energy Corporation (NYSE:DVN)
Number of Hedge Fund Holders: 51
Loss in Share Price Over Past Six Months as of December 6: 14%
Devon Energy Corporation (NYSE:DVN) is an independent energy company that primarily engages in the exploration, development, and production of oil, natural gas, and natural gas liquids. On November 1, Devon Energy declared a quarterly dividend of $1.35 per share, which is a 12.9% decrease from the prior dividend of $1.55. The forward yield was 6.99%.
On December 1, Piper Sandler analyst Mark Lear maintained an Overweight rating on Devon Energy Corporation (NYSE:DVN) stock and raised the price target to $98 from $96.
At the end of the third quarter of 2022, 51 hedge funds in the database of Insider Monkey held stakes worth $1.5 billion in Devon Energy Corporation (NYSE:DVN), compared to 57 in the previous quarter worth $1.5 billion.
In its Q2 2022 investor letter, GoodHeaven Capital Management, an asset management firm, highlighted a few stocks and Devon Energy Corporation (NYSE:DVN) was one of them. Here is what the fund said:
“Our biggest dollar gainer within this period was Devon Energy Corporation (NYSE:DVN), a position which emanated from a takeover in early 2021 of our long-time holding WPX Energy. We are sitting on a material (unrealized) gain from our cost and are now receiving material dividends thanks to Devon’s thoughtful fixed/variable dividend policy. Energy is now a hot sector for investors but we have had material exposure for a long time. We remember a bit too well $40 oil, NEGATIVELY PRICED front-month oil contract, and what it’s like to own a company with leverage and negative free cash flow during such periods. Our desire to have our biggest portfolio exposures be high-return, growing, reasonably predictable and moderately levered companies lead us to reduce our Devon exposure in the past. When the recent facts and circumstances for the industry changed and appeared supportive of healthy oil prices, we decided to maintain a sizable holding and more recently added to the position. At Devon’s Q1 dividend rate, which is most variable in nature, the shares now yield approximately 10% and our yield on our average cost is materially higher. In addition, we maintain additional energy exposure through our long-term (and successful) holding in Hess Midstream and less directly through TerraVest and Berkshire Hathaway’s energy investments.”
1. Newmont Corporation (NYSE:NEM)
Number of Hedge Fund Holders: 53
Loss in Share Price Over Past Six Months as of December 6: 30%
Newmont Corporation (NYSE:NEM) engages in the production and exploration of gold. On November 1, Newmont Corp posted earnings for the third quarter of 2022, reporting earnings per share of $0.27, missing market estimates by $0.07. The revenue over the period was $2.63 billion, down 9.3% compared to the revenue over the same period last year and missing market estimates by $250 million.
On November 4, Barclays analyst Matthew Murphy maintained an Equal Weight rating on Newmont Corporation (NYSE:NEM) stock and lowered the price target to $55 from $57.
Among the hedge funds being tracked by Insider Monkey, New York-based firm First Eagle Investment Management is a leading shareholder in Newmont Corporation (NYSE:NEM) with 17.9 million shares worth more than $750.5 million.
In its Q3 2022 investor letter, First Eagle Investment Management, an asset management firm, highlighted a few stocks and Newmont Corporation (NYSE:NEM) was one of them. Here is what the fund said:
“The largest gold miner in the world, Newmont Corporation (NYSE:NEM) shares lost ground in what was a volatile and ultimately down quarter for the price of gold. The Colorado-based company has continued to execute well in what has been a challenging environment. The company recently reaffirmed its full-year 2021 production guidance but indicated that it was likely to come in at the mid to low point of the range provided as a result of disruptions from Covid-19 as well as severe weather events. It also noted that inflation pressures were likely to push its costs higher in 2021. None of this changes our opinion of the stock, which has historically offered steady production anchored in good jurisdictions, a good pipeline of organic projects, a strong balance sheet and proven management.”
You can also take a peek at 10 Best Stocks in Each Sector and 10 Best Regional Bank Stocks To Invest In.
