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5 Materials Stocks to Make the Most of Economic Recovery

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Zacks Equity Research
·4 min read
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Promising news with regards to the COVID-19 vaccine and the expectation of another fiscal stimulus bode well for economic recovery. These, in turn, will allow the materials sector to flourish as it is perceived as cyclical in nature. This means that its performance is related to the condition of the economy.

In the early part of the year, when the pandemic forced the United States to go into a lockdown, sectors that depend on the functioning of the economy suffered a setback. Nonetheless, the economy seems to be at the cusp of a turnaround now.

Per the latest development on the vaccine front, the FDA said that the candidate of Pfizer Inc. PFE and BioNTech SE BNTX has tested highly effective with no specific safety concerns, as mentioned in a CNBC article. The article further mentioned that data from the vaccine trials was also consistent with the recommendation put forward for authorization of emergency use. Furthermore, the article mentioned that the U.K. started rolling out the vaccine on Dec 8. Separately, the chief scientist of Johnson & Johnson JNJ, Paul Stoffels, stated that the company might get phase 3 clinical trial results of its vaccine candidate by January, which will be much earlier than expected, as quoted in a Fox News article.

Moreover, a fresh round of fiscal relief will pep up the economy. Notably, House Speaker Nancy Pelosi and Senate Democratic Leader Chuck Schumer, in a joint statement, referred to a $916 billion COVID-19 relief bill based on the bipartisan framework, signed off by Senate Majority Leader Mitch McConnell as “progress.” However, they also noted that the said bill shouldn’t obstruct “the bipartisan Congressional talks that are underway.”

Meanwhile, the U.S. economy is also expected to grow at a steady pace in the fourth quarter. Gross domestic product (“GDP”) is expected to grow at an annual rate of 2.2% in the fourth quarter, per an estimate by the Conference Board.

Such positive developments are sure to aid the basic materials sector going forward. In fact, the Materials Select Sector SPDR (XLB) was already one of the best performing sectors in November, gaining 12.4%.

5 Top Materials Stocks to Buy Now

The economy is at the brink of a turnaround, owing to progress with regards to the COVID-19 vaccine as well as hopes of a new fiscal stimulus. This will allow economic activities, halted by social distancing and stay-at-home orders, to resume. Moreover, the fourth-quarter GDP is expected to indicate growth. Hence, this is a prudent time to invest in basic materials stocks. We have selected five such stocks that carry a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Bunge Limited BG operates as an agribusiness and food company in the United States. The Zacks Consensus Estimate for its current-year earnings increased 96.1% over the past 60 days. The company’s expected earnings growth rate for the current year is 43%.

Cabot Corporation CBT operates as a specialty chemicals and performance materials company in the United States. The Zacks Consensus Estimate for its current-year earnings increased 21.4% over the past 60 days. The company’s expected earnings growth rate for the current year is 58.2%.

International Paper Company IP operates as a paper and packaging company primarily in the United States. The Zacks Consensus Estimate for its current-year earnings increased 16.7% over the past 60 days. The company’s expected earnings growth rate for next year is 20.6%.

Neenah, Inc. NP produces and sells technical products, and fine paper and packaging products in the United States. The Zacks Consensus Estimate for its current-year earnings increased 42.2% over the past 60 days. The company’s expected earnings growth rate for next year is 40.7%.

Schnitzer Steel Industries, Inc. SCHN recycles ferrous and nonferrous scrap metals; and manufactures finished steel products in the United States. The Zacks Consensus Estimate for its current-year earnings increased 16.3% over the past 60 days. The company’s expected earnings growth rate for the current year is more than 100%.

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Johnson & Johnson (JNJ) : Free Stock Analysis Report
 
International Paper Company (IP) : Free Stock Analysis Report
 
Pfizer Inc. (PFE) : Free Stock Analysis Report
 
Cabot Corporation (CBT) : Free Stock Analysis Report
 
Neenah Paper, Inc. (NP) : Free Stock Analysis Report
 
Bunge Limited (BG) : Free Stock Analysis Report
 
Schnitzer Steel Industries, Inc. (SCHN) : Free Stock Analysis Report
 
BioNTech SE Sponsored ADR (BNTX) : Free Stock Analysis Report
 
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