7 stockpiles of materials to buy that help build anything

  • Cleveland Cliffs (FLC): A vertically integrated American steelmaker that has been in the business since 1846.
  • Trade metals (CMC): This steelmaker operates in North America and Europe, manufacturing, recycling and marketing steel and metal products.
  • Fearless Potash (IPI): Supplier of strategic chemicals for fertilizers, animal feed and other uses for the agriculture, industry and petroleum services sectors.
  • Nucor (NUDE): One of America’s major steel mills with operations dating back to 1905.
  • steel dynamics (STLD): Another American steelmaker who also owns a major steel recycling and brokerage business.
  • Teak Resources (TEAK): This Canadian industrial metals company owns a steel business as well as silver, copper, zinc and other chemical and metal mines.
  • Valley (VALLEY): A large global steel and industrial metals company with operations in Brazil.

Source: Shutterstock

The digital economy has been booming during and after the pandemic. But that interest goes back to the infrastructure sectors of the old economy. And chief among them are materials stocks and the companies they represent.

Building for the digital age also requires that the basic building blocks of a society are also up to the task. Whether integrating new technologies into low-tech projects or simply replacing old infrastructure with new endeavors, materials stocks are where it all begins.

Today, supply chain issues and global demand are driving up the prices of most industrial commodity stocks as well as agricultural products. This gives these companies more pricing power than they have had for many years.

And the quantity and scale of these projects means these stocks will be in demand for years to come. Many have already started their run, but they are still doing great business and have a lot of profits ahead of them.

Teleprinter Company Current price
FLC Cleveland Cliffs $32.08
CMC Trade metals $44.57
IPI Fearless Potash $111.26
NUDE Nucor $166.20
STLD steel dynamics $88.58
TEAK Teak Resources $43.88
VALLEY Valley $19.62

Cleveland Cliffs (CLF)

When you have a business in this industry that has been around since before the Civil War (James K. Polk was president when Cleveland-Cliffs Inc. (NYSE:FLC) started), you can rest assured that he knows how to survive the bad times and thrive in the good ones.

It takes a management philosophy of finding opportunities in all circumstances and then ensuring that each new generation carries on the tradition.

Right now, CLF is enjoying the good times. It has two mines, one in Michigan and one in Minnesota. Of these, he sells iron ore pellets. It also has a steel plant, coke making facilities and steel mills. And everything is made in the USA.

CLF stock has gained 72% in the last 12 months, 46% since the start of the year. Yet, it trades at a price-earnings ratio of just 5x.

This stock has an A rating in my portfolio binder.

Commercial Metals (CMC)

Although “Buy American” has some advantages, especially now, diversifying your risk across the markets can also be a smart strategy. This is the way Trade metals (NYSE:CMC) chose.

CMC has operations in the United States and Poland. It started like scrap metal operation in 1915. And its Polish plant remains primarily a steel recycling plant. In the United States, it has mini-factories and micro-factories as well as recycling operations.

Recycled metals or “scrap metal” are widely used in bridges and roads, as well as in automobiles. Recently, it has also started to be used to clean industrial wastewater.

CMC stock has gained 51% in the past 12 months, 21% since the start of the year, but still trades at a P/E below 6x. And it has a 1.3% dividend.

This stock has an A rating in my portfolio binder.

Intrepid Potash (IPI)

Although it is not technically an industrial metals company like the others, Fearless Potash (NYSE:IPI) provides strategic metals for a variety of industries. The most important is the agricultural sector.

Due to supply chain issues, as well as rising energy prices and now Russia’s invasion of Ukraine, agricultural prices are skyrocketing. Ukraine is a major wheat exporter and this crop is no longer on the market. This means there is demand with less supply.

As energy prices rise, farmers need to be as efficient as possible and ensure their yields are maximized. This means a growing demand for potash and other chemicals.

Additionally, IPI also supplies water and brine to unconventional drilling operations in the Permian and other nearby shales. This sector is also booming.

IPI stock has gained 251% in the past 12 months and 150% since the start of the year. Yet, it still trades at a P/E below 6x.

This stock has an A rating in my portfolio binder.

Nucor (NUE)

Given that Nucor (NYSE:NUDE) is one of the largest steel companies in the United States, it is certainly a top choice when it comes to material stocks in this market.

But earlier this month an interesting story came out NUE announces $15 million investment in NuScale, a next-generation nuclear energy company that is getting (pardon the pun) a lot of interest in its small modular reactors (SMRs).

This new technology means smaller reactors that can be scaled up or down by adding or removing modules to better meet the power needs of a city, town, or geographic area. It is an ideal solution for remote areas as well as places that can anticipate growth in the years to come. They are also safer and much easier to build than older nuclear systems.

NUE is likely investing because NuScale will need a steelmaker for the containment vessels, which would make the whole operation an American company.

NUE is almost 120 years old, so it has proven its ability to adapt and thrive. The stock has gained 109% in the past 12 months and 46% since the start of the year. But it trades at a P/E below 7x and has a 1.3% dividend.

This stock has an A rating in my portfolio binder.

Steel Dynamics (STLD)

The former “Rust Belt” is back in action, and based in Indiana steel dynamics (NASDAQ:STLD) is a perfect illustration. Midwestern steel towns have again gained interest as the nation’s steel business has grown in economic importance.

STLD is one of many – including those in this article – that are finding new footing as domestic steel production increases both from new demand for rolled steel, recycling of ferrous and non-ferrous metals, to finished products. STLD operates in these three sectors.

The company has a market capitalization of $15 billion, but it has a long growth streak given pent-up demand for new cars as well as new EV makers. Plus, the infrastructure stimulus bill will mean years of demand for beams for bridges, rebar, guardrails, rails, etc. This is the source of material stocks.

STLD stock has gained 74% in the past 12 months, 43% since the start of the year. It still trades at a P/E below 6x and has a 1.6% dividend.

This stock has an A rating in my portfolio binder.

Resources Teak (TEAK)

Before you can turn steel or iron into a product, you need the raw material to craft it in the first place. It’s there that Teak Resources (NYSE:TEAK) comes in. It is a Canadian-based mining company that has been supplying products to steel mills and others for years now.

Not only does it mine iron ore, but it also mines coking coal, copper, zinc, lead, silver and other specialty minerals. One of these is molybdenum, which is used to make more easily weldable steel and when combined with chromium it produces a high strength steel which has many industrial uses.

It has mining operations in North America as well as South America and has a reliable supply chain to get materials to its customers.

TECK has gained 101% in the last 12 months, 50% since the start of the year. It has a market capitalization of $22 billion, but a P/E below 10x. However, its strong growth has reduced its dividend to less than 1%.

This stock has an A rating in my portfolio binder.

Vale (VALE)

It is one of the kings of material stocks. Like its TECK brothers, Valley (NYSE:VALLEY) is a mining company. But VALE has a market capitalization of nearly $100 billion. It is one of the world’s leading mining and materials companies.

Not only does this Brazil-based company mine iron ore, manganese and other materials, but it also mines nickel. And this is a very big problem today because Chinese nickel – China is one of the biggest producers in the world along with Russia – cannot be transported by train through Russia. And shipping it has become more than difficult.

These have been the default markets for large nickel consumers. And this is where a South American connection comes in very handy in the United States. And with prices skyrocketing, VALE is reaping the rewards.

While VALE stock has gained 3% over the past 12 months, it has risen 41% since the start of the year. It has a P/E below 5x and a dividend of 13.3%.

This stock has an A rating in my portfolio binder.

As of the date of publication, Louis Navellier holds positions in CLF, CMC, NUE and STLD in this article. Louis Navellier has held (neither directly nor indirectly) any other position in the securities mentioned in this article.

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