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Analysts Are Recommending These 10 Commodity Stocks

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·8 min read
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In this article, we discuss 10 commodity stocks that analysts are recommending. If you want to see more stocks in this selection, click Analysts Are Recommending These 5 Commodity Stocks.

Although the stock markets have been in turmoil since Russia invaded Ukraine on February 14, commodity prices have shot through the roof. This is due in part to broken global supply chains and resultant shortages, and Western sanctions on Russia, which have played a vital role in the skyrocketing prices of gold, aluminum, nickel, coal, and other commodities.

Market Outlook for Commodities 2022

Commodities worldwide are gaining from the war in Ukraine. On March 2, the commodity-focused UK FTSE 100 traded 1.4% higher, with BP p.l.c. (NYSE:BP) and Rio Tinto Group (NYSE:RIO) topping the index.

As demand for batteries and chips increases worldwide, nickel shortages and disrupted supply chains have led prices to their highest level in nearly 11 years. Similarly, prices for agricultural commodities are expected to normalize as weather conditions improve, but they too will remain well above historical averages.

Although 2021 ended with gold prices 4% lower as compared to the last year, the geopolitical tensions have weakened the United States dollar and people are flocking to gold as a hedge and safe haven amid the market crisis, elevating demand and price consequently boosting the price of the metal.

Analysts are recommending several commodity stocks for investors who want to protect their portfolios from the current market crisis. Some of the most notable commodity names which made headlines recently include Alcoa Corporation (NYSE:AA), Vale S.A. (NYSE:VALE), and Freeport-McMoRan Inc. (NYSE:FCX).

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Our Methodology

We selected the companies that received positive analyst ratings over the past few weeks and displayed strong business fundamentals. All of these stocks have recently gotten Buy calls from famous analysts.

We have ranked the list according to the hedge fund sentiment around the stocks, which was gauged from the database of 924 elite funds tracked by Insider Monkey at the end of December 2021.

Analysts Are Recommending These Commodity Stocks

10. Nomad Royalty Company Ltd. (NYSE:NSR)

Number of Hedge Fund Holders: N/A

Nomad Royalty Company Ltd. (NYSE:NSR) is based in Montreal, Canada, operating as a gold and silver royalty company with a portfolio of 15 royalty and stream assets, eight of which are located on functional mines.

On February 22, Nomad Royalty Company Ltd. (NYSE:NSR) declared a C$0.05 per share quarterly dividend. The dividend will be distributed on April 14, for shareholders of record on March 31. The stock yields 2.14% as of March 18.

Stifel analyst Ingrid Rico on February 23 reiterated her Buy rating on Nomad Royalty Company Ltd. (NYSE:NSR). Canaccord analyst Carey MacRury also kept a C$16 price target on Nomad Royalty Company Ltd. (NYSE:NSR) with a Buy rating on February 22.

In addition to Alcoa Corporation (NYSE:AA), Vale S.A. (NYSE:VALE), and Freeport-McMoRan Inc. (NYSE:FCX), Nomad Royalty Company Ltd. (NYSE:NSR) is a notable commodity pick of market experts.

9. Integra Resources Corp. (NYSE:ITRG)

Number of Hedge Fund Holders: 2

Integra Resources Corp. (NYSE:ITRG) is a mineral resources company based in Vancouver, Canada. Integra Resources Corp. (NYSE:ITRG) develops mineral properties in the Americas, with a primary focus on the DeLamar Project, which comprises developing the DeLamar and Florida Mountain gold and silver deposits.

On February 24, Integra Resources Corp. (NYSE:ITRG)’s responsible mineral DeLamar Project was supported by the United States Department of Interior Bureau of Land Management, where the company was allowed to carry out underground development and exploration drill programs at its discretion on the project site.

Recently, Desjardins analyst John Sclodnick reiterated their Buy rating on Integra Resources Corp. (NYSE:ITRG) but lowered the stock's price target to to C$4 from C$7.

In the fourth quarter of 2021, Sprott Asset Management and Renaissance Technologies were bullish on Integra Resources Corp. (NYSE:ITRG), holding collective stakes amounting to more than $8 million.

8. Compass Minerals International, Inc. (NYSE:CMP)

Number of Hedge Fund Holders: 12

Compass Minerals International, Inc. (NYSE:CMP) is a Kansas-based company that sells essential minerals in the United States, Canada, Brazil, the United Kingdom, and international markets. The company primarily offers salt, magnesium chloride, sulfate of potash, and various products for plant nutrition.

On February 24, Compass Minerals International, Inc. (NYSE:CMP) declared a quarterly dividend of $0.15 per share, in line with previous. The dividend is payable on March 21, to shareholders of the company on March 10.

CL King analyst David Silver on March 3 raised the price target on Compass Minerals International, Inc. (NYSE:CMP) to $67 from $65 and kept a Buy rating on the shares. According to the analyst, Compass Minerals International, Inc. (NYSE:CMP)’s valuation is dependent on the future prospects for its identified lithium resource and smaller growth initiatives. The multi-year upgrades and improvements in operational efficiency are also steadily implemented at its Goderich salt mine, the analyst told investors in a research note.

The Q4 database of Insider Monkey indicates that 12 hedge funds were bullish on Compass Minerals International, Inc. (NYSE:CMP), compared to 14 funds in the prior quarter. Jeffrey Bronchick’s Cove Street Capital is the leading shareholder of Compass Minerals International, Inc. (NYSE:CMP), with 587,618 shares worth $30 million.

7. Turquoise Hill Resources Ltd. (NYSE:TRQ)

Number of Hedge Fund Holders: 12

Turquoise Hill Resources Ltd. (NYSE:TRQ) is a Montreal-based mining company that primarily explores for copper, gold, and silver deposits. Canaccord analyst Dalton Baretto on March 15 raised the price target on Turquoise Hill Resources Ltd. (NYSE:TRQ) to C$38 from C$31 and kept a Buy rating on the shares.

On March 2, Turquoise Hill Resources Ltd. (NYSE:TRQ) reported earnings for the fourth quarter of 2021. The company’s EPS for the period came in at $0.78, exceeding estimates by $0.20. The Q4 revenue of $503.90 million was up 24.39% year-over-year, outperforming market consensus by $23.08 million.

Activist investor Pentwater Capital on March 18 rejected Rio Tinto Group (NYSE:RIO)’s $2.7 billion takeover bid for Turquoise Hill Resources Ltd. (NYSE:TRQ). Pentwater Capital is the most significant minority shareholder of Turquoise Hill Resources Ltd. (NYSE:TRQ), with a 10% stake in the company, and the rejection came on the grounds of the bid priced too low.

According to the Q4 database of Insider Monkey, 12 hedge funds were bullish on Turquoise Hill Resources Ltd. (NYSE:TRQ), up from 10 funds in the prior quarter. Matthew Halbower’s Pentwater Capital Management is the leading shareholder of the company, with 18.8 million shares worth close to $310 million.

Here is what Massif Capital has to say about Turquoise Hill Resources Ltd. (NYSE:TRQ) in its Q4 2020 investor letter:

“Turquoise Hill remains a challenging company to evaluate and a problematic company to manage within our portfolio. The company holds rights to a world-class asset, but one with very different characteristics than Ivanhoe’s Kamoa Kakula. Kamoa is a flat, low depth, high-grade block of copper ore that is relatively easy to mine. Turquoise Hill’s OT mine is a deep underground mine with good grades and high tonnage, but it is very challenging to monetize. The planned extraction method, block cave mining, is still a relatively new approach to mining an asset in the grand scheme of things. The scale of the OT mine exacerbates the challenge. Management challenges compound technical risks. Rio-Tinto (the mine operator and developer via a 51% stake in Turquoise Hill) and Turquoise Hill seem to always be at odds with each other, and both parties seem to always be at odds with the Mongolian Government.

Although we have spent significant time underwriting the technical, managerial, and political risks associated with the investment, we are continuously surprised by how frequently issues occur for this company. With that in mind, we constructed a collar on the position during the fourth quarter, selling call options for January 2022 at a $20 strike and using the proceeds to buy January 2022 puts on the position at a $7 strike. This will allow us to confidently hold the position in the near term, knowing we have locked in a gain of at least 50% from our purchase price while still allowing for significant potential price appreciation from the current $12 price.”

6. Yamana Gold Inc. (NYSE:AUY)

Number of Hedge Fund Holders: 18

Yamana Gold Inc. (NYSE:AUY) is a Toronto-based precious metals producer. The company has gold and silver exploration properties throughout the Americas, including Canada, Brazil, Chile, and Argentina. The company’s earnings for the fourth quarter of 2021 clocked in above market consensus estimates.

Canaccord analyst Carey MacRury on February 23 raised the price target on Yamana Gold Inc. (NYSE:AUY) to C$9 from C$8 and kept a Buy rating on the shares.

On February 17, Yamana Gold Inc. (NYSE:AUY) declared a $0.03 per share quarterly dividend. The dividend will be paid on April 14, to shareholders of record on March 31. The shares yield 2.23% as of March 18.

Among the hedge funds tracked by Insider Monkey, 18 funds were bullish on Yamana Gold Inc. (NYSE:AUY) at the end of December 2021, up from 15 funds in the last quarter. The total stakes held in Q4 amounted to $286.70 million. Two Sigma Advisors is a prominent shareholder of the company, with 17.2 million shares worth $72.7 million.

Yamana Gold Inc. (NYSE:AUY) is gaining the interest of institutional investors amid a soaring commodity market, just like Alcoa Corporation (NYSE:AA), Vale S.A. (NYSE:VALE), and Freeport-McMoRan Inc. (NYSE:FCX).

Click to continue reading and see Analysts Are Recommending These 5 Commodity Stocks.

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Disclosure: None. Analysts Are Recommending These 10 Commodity Stocks is originally published on Insider Monkey.