There is a lot of talk these days about how inflation can present investors with both opportunities and challenges. There are obvious challenges as rising input costs could eat into profit margins at certain companies or erode discretionary expenditures as consumers are forced to pay more for necessities. Besides these opportunities, commodity stocks are also available, which trade raw materials that form the backbone of many economies. Increasing the price of materials is good for the bottom line if you’re pulling them from the ground. Each of the 10 stocks below has a dominant commodity business, with dividends that amount to more than 3% every year at current prices.
1. Denison Mines Corp.
Denison, based in Canada, ranks 10th on a list of the 10 best commodity stocks to buy right now. McClean Lake Mine is the company’s primary uranium asset and the Midwest Uranium Project is its main asset in northern Saskatchewan. The stock increased earlier in March following reports that it would be added to Canada’s benchmark S&P/TSX Composite index on March 22.
2. BHP Group (ticker: BHP)
Australia-based BHP is one of the world’s largest diversified materials conglomerates. Energy commodities are extracted from coal and petroleum, copper and iron are mined, and potash, a potassium salt used in fertilizers and other agricultural chemicals, is extracted and sold to farmers. Due to its diversified operations, BHP offers both stability and scale as a $200 billion business.
3. Energy Fuels Inc.
Energy Fuels is one of the world’s largest uranium producers. In FY’20, the company posted GAAP EPS of -$0.23, beating Street estimates by $0.02. It announced last year that it would venture into the rare earth element sector. White Mesa Mill owns uranium-bearing monazite sands. During the last 12 months, the stock gained 350%.
4. LyondellBasell Industries N.V. (LYB)
LyondellBasell is a chemical company with operations in the U.S., Europe, and Asia, despite its Texas headquarters. Geographically diverse as LYB is, it also produces multiple chemicals, including polyethylene and polypropylene plastics used in packaging of household goods, advanced polymers and agrotextiles for farming and landscaping, as well as industrial acids used by manufacturers and food service companies.
5. Sociedad Química y Minera de Chile S.A.
With the rise of EVs and energy storage solutions, SQM is one of the world’s biggest producers of lithium. Chile is home to SQM’s production facilities. Stock prices have risen 130% in the past year. It recently announced a plan to double its production of lithium hydroxide to 60K tons from 30K tons. Lithium sales volumes for Q4 were up 50% compared to the previous quarter, according to the company.
6. Newmont Corp. (NEM)
Gold is Newmont’s primary focus. As part of its $55 billion operations, it also produces copper, silver, zinc, and lead. Many of these minerals are byproducts of gold mining, and are not necessarily being sought out by NEM.
7. Coeur Mining, Inc.
Among our list of 10 best commodities to buy now, Illinois-based Coeur Mining ranks 7th. Gold, silver, lead, and zinc are among the key commodities that the company mines and explores in the U.S., Canada, and Mexico. It has upbeat reserves at year’s end. Coeur’s gold reserves total about 3.12 million ounces, up 22% from last year, while its silver reserves increased 42% to about 260 million ounces. Over the past year, the stock has increased 173%.
8. Rio Tinto Group (RIO)
The company operates refineries, smelters, mills, and other processes related to materials along with its mines. Aluminum, copper, diamonds, gold, iron ore, diamonds, and uranium are some of the metals and minerals RIO extracts. As one of the most recognizable names in metals and with its HQ in London, RIO has the scale and expertise to succeed in today’s market.
9. SSR Mining Inc.
With ownership of the largest silver mine in Argentina, the Canadian company explores gold, silver, zinc and tin. With higher gold and silver prices and lower costs, the company achieved better results in the fourth quarter. Its stock price has increased 22% in the past year.
10. Southern Copper Corp. (SCCO)
Southern Copper, as its name suggests, mines and refines copper primarily in the Southern Hemisphere. Aside from copper, SCCO also operates mines that produce zinc, lead, silver, gold, and other materials, but copper is in the name for a reason as it is the firm’s driving force. Copper, due to its high thermal and electrical conductivity, is perhaps the most versatile of metals.