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 Newmont Corporation (NYSE:NEM) 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.
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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).
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.”
Overall, NEM ranks 3rd on our list of 10 Best Materials Stocks to Buy Right Now. While we acknowledge the potential of NEM 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 NEM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.