We recently published a list of 10 Best Materials Stocks to Buy Right Now. In this article, we are going to take a look at where Hudbay Minerals Inc. (NYSE:HBM) stands against other best materials stocks.
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.
Source: Pixabay
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).
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.”
Overall, HBM ranks 6th on our list of 10 Best Materials Stocks to Buy Right Now. While we acknowledge the potential of HBM 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 time frame. If you are looking for a deeply undervalued AI stock that is more promising than HBM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
