U.S. Markets closed

2 Mining ETFs and Stocks to Buy Now

Sanghamitra Saha

Talks of President Trump’s infrastructural boost and its benefits on mining and material stocks took a backseat lately on political uncertainty. However, China took charge of reinvigorating the space.

Miner stocks had a great session on May 15, 2017 on an upswing in base metals prices as Chinese President Xi Jinping indicated $124 billion in new financing for his new Silk Road project. China has described the latest initiative as a new means to propel global development since Xi revealed the plan in 2013. The project intends to “expand links between Asia, Africa, Europe and beyond reinforced by billions of dollars in infrastructure investment.”

As per the source, Xi vowed to invest an additional “100 billion yuan ($14.50 billion) into the existingSilk Road Fund, 380 billion yuan in loans from two policy banks and 60 billion yuan in aid to developing countries and international bodies in countries along the new trade routes.”

If this was not enough, the global commodity market received another boost in the form of the oil price rebound backed by Saudi and Russia. Two oil majors agreed to prolong their ongoing output cuts from the first half of 2017 to the end of the first quarter of 2018. United States Oil USO and United States Brent Oil BNO gained 2.2% and 2.1% on May 15, 2017, helped by the news (read: Saudi, Russia Boost Oil Price: Bet on Leveraged ETFs).

To add to this, the greenback remained subdued in recent trading on weaker-than-expected U.S. economic readings. This in turn will help boost global commodity prices as these are linked to the U.S. dollar. The activity in the mining sector is decent as evident by 9,000 jobs created in the sector in April (read: Sector ETFs to Win on Strong April Job Data).

We thus highlight two ETFs and stocks from the metal and mining space that emerged as winners in recent sessions. These products are worth keeping an eye on to see if they can remain good performers in the near term (read: Top Mining ETFs & Stocks of 2016: The Best from a Winner).

ETF Picks

SPDR S&P Metals & Mining ETF XME – Up 1.1% on May 15

The 29-stock fund follows the S&P Metals & Mining Select Industry Index, which represents the metals and mining sub-industry portion of the S&P Total Market Index. Coeur Mining Inc. (6.06%), Royal Gold (5.99%) and Hecla Mining Company (5.8%) are the top three holdings. The fund charges 35 bps in fees.

iShares MSCI Global Metals & Mining Producers ETF PICK – Up 1.3%

This underlying index of the fund looks to track the performance of companies in both developed and emerging markets that are mainly engaged into the extraction and production of diversified metals, aluminum, steel and precious metals and minerals, excluding gold and silver. The fund has focuses on BHP BILLITON Ltd (8.92%), Rio Tinto Plc (7.50%) and Glencore Plc (7.11%). The fund charges 39 bps in fees.

Stock Picks

Uranium Energy Corp. UEC

Uranium Energy is a U.S.-based junior resource company with the target of emerging as a near-term ISR uranium producer in the U.S. The stock has a Zacks Rank #2 (Buy) and its Zacks Industry Rank is in the top 35%.

McEwen Mining Inc. MUX

McEwen Mining Inc. explores for, develops, produces, and sells gold, silver, and copper ores in Argentina, Mexico, and the U.S. The stock has a Zacks Rank #2 and its Zacks Industry Rank is in the top 35%.