In this article, we shall discuss the top 5 zinc stocks picked by hedge funds for 2022. To read our detailed analysis of the zinc and precious metals industry in 2022, go directly and see Top 10 Zinc Stocks Picked By Hedge Funds for 2022.
5. Rio Tinto Group (NYSE:RIO)
Number of Hedge Fund Holdings: 24
Based in London, UK, Rio Tinto Group (NYSE:RIO) is an Anglo-Australian multinational metals and mining company. It is the second-largest mining corporation in the world and in 1962, merged with Consolidated Zinc to form the Rio Tinto – Zinc Corporation and its main subsidiary, Conzinc Riotinto of Australia.
On October 19, JPMorgan analyst Lyndon Fagan raised the price target on Rio Tinto Group (NYSE:RIO) to $6113.32 from $6079.86, maintaining a Neutral rating on the shares. The analyst contends that the new management which has taken charge of the company has not been able to change the overall attitude towards corporate sustainability which had prospered within the company for years. This, combined with the rise in global tensions and macroeconomic pressures, has increased operational risk for the mining mammoth. However, the analyst also ascertains that the company is currently in a bull cycle and is expected to continue on its current growth trajectory.
As of Q2 2022, Rio Tinto (NYSE:RIO) is big on dividends to shareholders, having an annual dividend yield of 10.50% and a quarterly dividend of $1.50 per share. In Q2 2022, the company delivered an underlying EBITDA of $15.6 billion and a total revenue of $60.2 billion. Hedge fund sentiment around Rio Tinto Group (NYSE:RIO) took a hit, with 24 hedge funds long the stock in Q2 2022, down from 26 in the preceding quarter.
4. Vale S.A. (NYSE:VALE)
Number of Hedge Fund Holdings: 27
One of the largest logistics operators in Brazil, Vale S.A. (NYSE:VALE) is a multinational corporation engaged in metals and mining of iron ore, nickel, manganese, copper, and zinc. The company is based in Rio De Janeiro, and as of October 19, has a market cap of $61.2 billion. In Q2 2022, Vale S.A. (NYSE:VALE) posted an EPS of $1.32, beating estimates of $0.81 by $0.51. Moreover, the company generated a total revenue of $11.16 billion in Q2 2022. Vale S.A. (NYSE:VALE) managed to maintain investor interest in Q2 2022, with 27 hedge funds having stakes in the company in both, Q1 and Q2 of 2022.
On October 5, Deutsche Bank analyst Liam Fitzpatrick lowered the price target on Vale S.A. (NYSE:VALE) to $19 from $20, keeping a Hold rating on the shares. The reduced target prices on metals and mining stocks was to reflect weakening demand and macroeconomic risks and while the analyst sees downside risks near-term, he contends that metal equities have already been priced in a mild recession. He predicts that when the global cycle is restored, the market will be faced with structurally tight supply and prices would once again rise to levels which would provide incentive to investors.
Here is what GMO LLC had to say about Vale S.A. (NYSE:VALE) in their Q1 2022 investor letter:
“Let’s look at Vale (NYSE:VALE), the world’s largest iron ore producer, as a case study for how shareholders can be rewarded. Vale’s stock price is about where it was at the beginning of last year. Despite the market’s lack of enthusiasm, the company generated about $20 billion of free cash flow last year. Not bad for a company with a market cap of a little over $100 billion and no substantive debt as of the end of March. 4 What did the company do with all that cash? Last year, Vale paid out about $9 billion in regularly scheduled dividends and distributed another $10 billion between extra dividends and share repurchases. Combined with dividends distributed in the first quarter of this year and a recently announced share repurchase, Vale has returned or announced the return of over $33 billion since the beginning of last year, almost a 32% yield relative to the market cap of the company. Not a bad way to win.”
3. Wheaton Precious Metals Corp. (NYSE:WPM)
Number of Hedge Fund Holdings: 27
Based in Vancouver, Wheaton Precious Metals (NYSE:WPM) is a Canadian multinational precious metals streaming company and focuses on the production of streaming of silver, lead, copper and zinc. On September 12, Goldman Sachs analyst Emily Chieng initiated coverage of Wheaton Precious Metals (NYSE:WPM) with a Buy rating and a $38.33 price target. According to the analyst, the company’s recent stream acquisitions will generate stronger free cash flow, underpinning increased potential for capital returns. The analyst contends that of all the players in the precious metals streaming sector, Wheaton Precious Metals (NYSE:WPM) provides the greatest exposure to precious metals.
As of the second quarter of 2022, Wheaton Precious Metals (NYSE:WPM) posted earnings of $0.33 per share, beating estimates of $0.32 by $0.01. Investor interest around the stock declined slightly in Q2 2022, with 27 hedge funds long the stock, down from 28 in the preceding quarter. As of Q2 2022, First Eagle Investment Management is the largest shareholder in Wheaton Precious Metals (NYSE:WPM), having a total stake of $613.67 million. The company generated a total revenue of $302.92 million in Q2 2022.
2. Teck Resources Ltd. (NYSE:TECK)
Number of Hedge Fund Holdings: 46
Teck Resources Ltd. (NYSE:TECK) is a diversified natural resources company which is engaged in mining and mineral development, including coal for the steelmaking industry, copper, zinc, and energy. In 2021, the company produced more than 800,000 tonnes of zinc in concentrate and 420,000 tonnes of refined zinc. It is currently the world’s third largest producer of mined zinc. In Q2 2022, Teck Resources (NYSE:TECK) posted an EPS of $2.4, beating estimates of $2.26 by $0.15. The company is a dividend payer, with an annual dividend yield of 1.15% and a quarterly dividend amount of $0.09 per share.
On October 16, Stifel analyst Alex Terentiew raised the price target on Teck Resources (NYSE:TECK) to $44.12 from $42.67, maintaining a Buy rating on the shares. According to the analyst, the company is delivering stellar profits currently and though profits are expected to decline as the fears of a recession loom large, earnings are likely to maintain at about $5 next year. Copper production is set to rise and the weakening Canadian currency will lower costs. Moreover, the government incentives may keep steel and coal prices more favorable than some expect. The declining cap-ex, rising production, depleted share price of $32.99 as of October 20, and further tailwinds from energy and zinc, have all contributed to the analyst’s Buy rating on Teck Resources (NYSE:TECK).
1. Newmont Corp. (NYSE:NEM)
Number of Hedge Fund Holdings: 56
Based in Greenwood Village, Colorado, Newmont Corporation (NYSE:NEM) is an American mining company which engages in the production of gold, copper, silver, zinc, and lead. It is the largest gold mining corporation in the world. Newmont Corporation (NYSE:NEM) is spending $500 million per year on renewable energy projects through 2025 to reduce carbon emissions by 30% by 2030. Hedge fund sentiment around Newmont Corporation (NYSE:NEM) turned favorable in Q2 2022, with 56 hedge funds having stakes worth $2.92 billion. This was up from 53 hedge funds in Q1 2022, which had stakes valued at $3.53 billion. As of Q2 2022, Heathbridge Capital Management is the largest shareholder in the stock, owning more than 0.52 million shares worth $21.75 million.
On September 12, Goldman Sachs analyst Emily Chieng initiated coverage of Newmont Corporation (NYSE:NEM) with a Buy rating and a $53 price target. According to the analyst, the stock’s cheap valuation creates the ideal entry point for low-risk investors. The analyst noted above-peer production growth for the company through 2026 with the commencement of development projects including Ahafo North, Tanami Expansion 2, and Yanacocha Sulfides in the next 2-4 years.
Here is what First Eagle Investment Management had to say about Newmont Corporation (NYSE:NEM) in their Q3 2021 investor letter:
“The largest gold miner in the world, Newmont 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.”
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