Home Finance Top Materials Stocks for June 2023

Top Materials Stocks for June 2023

by CoinNews

Top materials stocks this month include Snowline Gold Corp. (SNWGF), Patriot Battery Metals Inc. (PMETF), and NGEx Minerals Ltd. (NGXXF), the share prices of which have each risen more than 150% in the last year.

The Materials Select Sector SPDR Fund (XLB) fell 6% over the past 12 months, while the Russell 1000 Index rose by 4%.

Here are the top three materials stocks with the best value, the fastest growth, and the most momentum. All data in the tables below are as of June 6.

Best Value Materials Stocks

These are the materials stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows that you’re paying less for each dollar of profit generated.

Best Value Materials Stocks
  Price ($) Market Capitalization (Market Cap) ($B) 12-Month Trailing P/E Ratio
Cemex S.A.B. de C.V. (CX) 6.72 9.7 0.6
Arch Resources Inc. (ARCH) 110.67 2.1 1.8
Alpha Metallurgical Resources Inc. (AMR) 148.24 2.1 2.0

Source: YCharts

  • Cemex S.A.B. de C.V.: Located in Mexico, Cemex provides building materials such as ready-mix concrete, asphalt products, roofing tiles, drainage basin barriers, and concrete pipes for sewer systems. In early May, Cemex reported first-quarter results; net income surged by 42%, and total revenue grew by 8% compared with the previous year. A major role in recent EBITDA growth is Cemex’s investment in their Urbanization Solutions business.
  • Arch Resources Inc.: Arch Resources produces metallurgical products for steel industry applications. It operates mining complexes in West Virginia, Wyoming, and Colorado.
  • Alpha Metallurgical Resources Inc.: Alpha Metallurgical Resources is a mining company that supplies metallurgical products to the steel industry. The company extracts, processes, and markets coal for sale to steel and coke producers, electric utilities, and industrial clients. It has operations in Virginia and West Virginia.

Fastest Growing Materials Stocks

These are the top materials stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth.

Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 1,000% were excluded as outliers.

Fastest Growing Materials Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
Albemarle Corp. (ALB) 213.11 25.0 389 129
Martin Marietta Materials Inc. (MLM) 418.10 26.0 474 10
Sylvamo Corp. (SLVM) 42.51 1.8 281 17

Source: YCharts

  • Albermarle Corp.: Albemarle is a manufacturer of bromine and lithium specialty chemicals. Abemarle’s net income surged nearly fivefold in the first quarter on increased sales volume. Though in May, the company cut its earnings forecasts for the remainder of the year, citing lower lithium prices. On May 22, the company announced a five-year partnership with Ford Motor Co. (F) to supply the carmaker with lithium hydroxide for its electric vehicles.
  • Martin Marietta Materials Inc.: Martin Marietta supplies building materials to the construction industry. Martin Marietta has increased its dividend every year for seven years. On May 11, the company announced a quarterly dividend of $0.66 per share, payable on June 30. The company recorded record profits in the first quarter, with margins benefitting from a global shortage of sand, gravel, and cement.
  • Sylvamo Corp.: Sylvamo is a producer of paper products that are distributed globally.

Materials Stocks with the Most Momentum

These are the materials stocks that had the highest total return over the past 12 months.

Materials Stocks with the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Snowline Gold Corp. (SNWGF) CA$3.53 CA$0.5 336
Patriot Battery Metals Inc. (PMETF) CA$15.42 CA$1.5 310
NGEx Minerals Ltd. (NGXXF) CA$6.75 CA$1.2 158
Russell 1000 Index N/A N/A 4
S&P 500 Basic Materials Index (XLB) N/A N/A -6

Source: YCharts

  • Snowline Gold Corp.: Snowline Gold is a gold exploration company with multiple properties located in the Yukon in northwestern Canada.
  • Patriot Battery Metals Inc.: Patriot Battery is a Canadian company that owns mineral properties for the exploration of lithium, copper, gold, and platinum deposits. Patriot Battery was one of many mining companies forced to halt certain operations at Quebec mines in June due to heightened forest fire risk.
  • NGEx Minerals Ltd.: NGEx Minerals acquires, explores, and develops mineral properties in South America. The stock price jumped nearly 25% on April 4 after NGEx said it had discovered large amounts of copper, silver, and gold mineralization at its Potro Cliffs mine in Argentina. On May 15, NGEx reported first-quarter results; net income nearly doubled on revenue growth of 76% compared to last year.

Advantages of Investing in Materials Stocks

Core Demand: Materials are the foundations of the global economy, required to build everything from microchips and luxury cars to lightbulbs and toilet paper. While the prices of certain materials rise and fall with supply and demand, companies in this sector enjoy a degree of demand stability that sectors like consumer discretionary, tech, and communications do not.

Portfolio Hedge: Materials companies that mine for precious metals, such as gold and silver, provide investors with a partial hedge against cyclical holdings in their portfolio, often outperforming during market downturns. During times of economic instability with higher inflation and interest rates, materials companies withstand difficulties with solid dividend growth and healthy cash flows.

Risks of Investing in Materials Stocks

Rising Costs: Materials companies face periods of rising costs that can crimp earnings, especially if they coincide with falling commodity prices. Mining and developing resources is capital intensive. Supply chain disruptions, rising fuel costs, and machinery maintenance can cause significant challenges, particularly during periods of spiking inflation.

Industrial Action: Certain industries within the material sector, such as mining, are heavily unionized, increasing the risk of industrial action that can temporarily suspend or reduce operations. A reduction in output has the potential to impact a mining company’s earnings which can put downward pressure on its share price. In 2021, iron-ore mining giant Rio Tinto Group (RIO) had to reduce one of its mines to 25% capacity for several months due to strike action, which union officials claimed cost the company around $5 million daily.

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As of the date this article was written, the author does not own any of the above stocks.

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