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\nTop 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.\n
\n\nThe Materials Select Sector SPDR Fund (XLB) fell 6% over the past 12 months, while the Russell 1000 Index rose by 4%.\n
\n\nHere 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.\n
\n\nBest Value Materials Stocks
\nThese 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.\n
\n\n| Best Value Materials Stocks | \n|||
|---|---|---|---|
| \u00a0 | \nPrice ($) | \nMarket Capitalization (Market Cap) ($B) | \n12-Month Trailing P/E Ratio | \n
| Cemex S.A.B. de C.V. (CX) | \n6.72 | \n9.7 | \n0.6 | \n
| Arch Resources Inc. (ARCH) | \n110.67 | \n2.1 | \n1.8 | \n
| Alpha Metallurgical Resources Inc. (AMR) | \n148.24 | \n2.1 | \n2.0 | \n
Source: YCharts\n
\n\n- \n
- 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. \n
- 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. \n
Fastest Growing Materials Stocks
\nThese 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.\n
\n\nBoth 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.\n
\n\n| Fastest Growing Materials Stocks | \n||||
|---|---|---|---|---|
| \u00a0 | \nPrice ($) | \nMarket Cap ($B) | \nEPS Growth (%) | \nRevenue Growth (%) | \n
| Albemarle Corp. (ALB) | \n213.11 | \n25.0 | \n389 | \n129 | \n
| Martin Marietta Materials Inc. (MLM) | \n418.10 | \n26.0 | \n474 | \n10 | \n
| Sylvamo Corp. (SLVM) | \n42.51 | \n1.8 | \n281 | \n17 | \n
Source: YCharts\n
\n\n- \n
- 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. \n
- 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 $0.66 per share, payable on June 30. The company recorded record profits in the first quarter, with margins benefitting from a global shortage of sand, gravel, and cement. \n
- Sylvamo Corp.: Sylvamo is a producer of paper products that are distributed globally. \n
Materials Stocks with the Most Momentum
\nThese are the materials stocks that had the highest total return over the past 12 months.\n
\n\n| Materials Stocks with the Most Momentum | \n|||
|---|---|---|---|
| \u00a0 | \nPrice ($) | \nMarket Cap ($B) | \n12-Month Trailing Total Return (%) | \n
| Snowline Gold Corp. (SNWGF) | \nCA$3.53 | \nCA$0.5 | \n336 | \n
| Patriot Battery Metals Inc. (PMETF) | \nCA$15.42 | \nCA$1.5 | \n310 | \n
| NGEx Minerals Ltd. (NGXXF) | \nCA$6.75 | \nCA$1.2 | \n158 | \n
| Russell 1000 Index | \nN/A | \nN/A | \n4 | \n
| S&P 500 Basic Materials Index (XLB) | \nN/A | \nN/A | \n-6 | \n
Source: YCharts\n
\n\n- Snowline Gold Corp.: Snowline Gold is a gold exploration company with multiple properties located in the Yukon in northwestern Canada.
- Patriot Battery Metals Inc.:\u00a0Patriot 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.\u00a0On 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
\nCore 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.\n
\n\nPortfolio 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.\n
\n\nRisks of Investing in Materials Stocks
\nRising 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.\n
\n\nIndustrial 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.\n
\n\nThe comments, opinions, and analyses expressed on Investopedia are for informational purposes online. Read our warranty and liability disclaimer for more info.\n
\n\nAs of the date this article was written, the author does not own any of the above stocks.\n
- \n
Cemex S.A.B. de C.V. "Cemex reports solid growth in Sales and EBITDA, while marking important inflection point in margin recovery." Pg. 7
\nAlbemarle Corp. "Albemarle Reports Net Sales Increase of 129% for the First Quarter 2023."
\nAlbermarle Corp. "Albermarle Establishes Strategic Agreement With Ford Motor Company."
\nMartin Marietta Materials Inc. "Martin Marietta Reports Quarterly Cash Dividend."
\nMartin Marietta Materials Inc. "Martin Marietta Reports First-Quarter 2023 Results."
\nPatriot Battery Metals Inc. "Patriot Provides Operational Update On The Work Programs At The Corvette Property, Quebec, Canada."
\nNGEx Minerals Ltd. "NGEx Minerals Reports New Discovery at Potro Cliffs - Drills 60m at 7.52% CuEq including 10m at 18.00% CuEq."
\nNGEx Minerals Ltd. "NGEx Minerals Reports Q1 2023 Results; New Discovery in the Vicu\u00f1a Metals District."
\nMining.com. "Americans Face Record Metals Prices as Shipping Costs Surge."
\nMining Magazine. "Rio Tinto Makes Deal to End Two-Month Strike at Kitimat."
\n
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\n\n\nInvesting in Materials Stocks
\nThe materials sector produces many of the building blocks needed to make the things we use every day. That makes it an important industry for investors to know about.
\n![\"Large](\"https://m.foolcdn.com/media/dubs/images/Large_blue_metal_barrells_stacked_together_in_.width-880.jpg\")
\nWhat is the materials sector?
\nThe materials sector includes a wide variety of companies, including those that manufacture or mine:
\n- Chemicals, plastics, and glass
- Construction materials
- Paper, forest products, and packaging products
- Metals and minerals
Demand for materials is cyclical, making the sector's participants highly susceptible to changes in the economy. If economic conditions weaken, demand for basic materials tends to decline, lowering prices and affecting profitability for materials producers.
The economic cycle, however, is only one of many factors that can affect the materials sector. Supply chain issues, legislation, and inflation are just some of the other factors that can affect demand, prices, and industry profitability for the materials sector.
In 2022, a new headwind emerged in the sector in the wake of Russia\u2019s invasion of Ukraine. The war disrupted the global supply chain for materials because the region produces vital metals for making steel and exports minerals for fertilizer, such as potash. The supply issues drove up prices of most basic materials, greatly affecting the sector and the broader economy.
\nTop materials stocks in 2024
Although many companies operate in the materials industry, the following four stand out as some of the top materials stocks for investors to consider:
\n| \nCompany\n | \n\nDescription\n | \n
|---|---|
| \nRio Tinto (NYSE:RIO)\n | \n\nA leading global mining company\n | \n
| \nNucor (NYSE:NUE)\n | \n\nA major U.S. steelmaker\n | \n
| \nAir Products & Chemicals (NYSE:APD)\n | \n\nA global supplier of industrial gases\n | \n
| \nEagle Materials (NYSE:EXP)\n | \n\nA major U.S. producer of concrete, cement, and drywall\n | \n
1. Rio Tinto
Rio Tinto is one of the world's leading mining companies. The London-based company produces the three top industrial metals -- iron ore, aluminum, and copper -- and several other important metals and minerals.
Rio Tinto focuses on these industrial metals because they are the ones the global economy most commonly consumes. The uses for iron ore, aluminum, and copper are numerous and growing:
- Iron ore: The primary material for making the steel used for cars, appliances, buildings, wind turbines, and other infrastructure.
- Aluminum: A lightweight metal and a vital component for many technology applications. Aluminum is used to make jet engines, electric vehicles, and mobile phones.
- Copper: Copper is an excellent conductor of electricity, making it essential for electronics, electric vehicles (EVs), and for producing solar energy. It is also a vital component of many technology applications.
Although these metals are highly sensitive to cyclical changes in the global economy, demand for the metals Rio Tinto produces should continue to grow.
The company also boasts a strong balance sheet and some of the lowest-cost operations in the world. It has the financial flexibility to expand its operations while returning cash to investors via share repurchases and dividend payments. As a result, Rio Tinto is well-positioned to cope with changes in demand for these commodities and create value for its shareholders.
2. Nucor
Nucor is the largest and most diversified steel and steel products company in North America. It\u2019s also the continent\u2019s largest steel recycler.
The company\u2019s focus on steel positions it for two megatrends. First, steel is essential for making wind turbines, so it\u2019s vital to the renewable energy industry. Steel is also crucial for infrastructure, such as bridges and railways, making it a beneficiary of increased infrastructure spending in the U.S.
Nucor has a low and highly variable cost structure. Because of that, it has a long history of generating free cash flow throughout the cycle. The steelmaker has maintained a strong balance sheet and delivered its 49th straight annual dividend increase in late 2021. The increase put Nucor on track to become a Dividend King.
\n3. Air Products & Chemicals
Air Products & Chemicals is one of the world\u2019s leading industrial gas companies. It supplies essential industrial gasses to the refining, chemical, metals, electronics, manufacturing, and food and beverage industries. It\u2019s also a leading global supplier of liquefied natural gas (LNG) process technology and equipment.
The company is a major supplier of hydrogen, which could play an important role in fueling the economy in the future. In addition, its expertise in carbon capture and storage could help reduce greenhouse gas emissions. Add that to its importance to the growth of LNG, a widely used fuel, and Air Products is playing a vital role in helping the global economy transition to cleaner energy sources.
Air Products also boasts a strong financial profile, including an excellent balance sheet and healthy cash flow. That gives it the financial flexibility to expand its operations and pay a growing dividend. The company is a Dividend Aristocrat and delivered its 40th consecutive annual dividend increase in early 2022.
4. Eagle Materials
Eagle Materials is a leading U.S. building materials producer. It manufactures heavy materials (cement, concrete, and aggregates) and light materials (gypsum wallboard and recycled paperboard). These materials are crucial to the construction industry.
Eagle Materials strategically focuses on operating heavy materials manufacturing capacity in the U.S. heartland, limiting the impact of competition from imports. Meanwhile, it concentrates its light materials manufacturing capacity in the southern portion of the country where home construction is rising. These features enable it to benefit from higher prices and make more money on the materials it produces.
Eagle Materials produces a lot of cash, giving it the funds to expand its operations and return capital to shareholders through dividends and share repurchases. Its expansion focus in recent years has been on the heavy materials side of its business, acquiring several cement manufacturing facilities to boost its capacity. Those deals have helped increase its earnings and shareholder value. Meanwhile, it has sold non-core assets to maintain a strong financial position so that it can take advantage of expansion opportunities when they arise.
\nRelated investing topics
\nShould you invest in materials stocks?
While all companies in the basic materials sector face risks related to the health of the economy, the best materials companies are well-positioned financially and benefit from a diversified portfolio of operations. The top materials companies have multiple businesses, investment-grade bond ratings, manageable debt, and low production costs. These factors enable them to still make money even when materials prices decline.
Materials companies are more likely to perform well when the economy is booming, making these companies a better buy in bull markets. But, even when the economy is growing, fierce competition in the materials sector tends to restrict companies' abilities to generate substantial profit, which affects share prices.
Investors need to be very picky when choosing materials stocks. They need to focus their attention on well-run, financially strong companies with visible growth prospects. A sharp focus increases the probability that materials stocks can deliver attractive returns for investors.
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\nThe 9 Best Materials Stocks to Buy Now
\nThe short-term outlook for materials stocks is low, but these nine names could be diamonds in the rough.
\n\n![\"piles](\"https://cdn.mos.cms.futurecdn.net/oVMxtMLUw3F626WgiTuXza-1920-80.jpg.webp)
![\"Kyle](\"https://dev.mos.cms.futurecdn.net/ncKM3rHNrihtAqhLamEwJ9.jpg\")
Materials stocks aren't exactly glamorous in most years, but Wall Street's experts expect some particularly dull results from the sector this year.
That doesn't mean there aren't a few diamonds in the rough, however. We've recently sifted through the sector to find the best stocks to buy in the space – nine picks that the pros believe are among best materials stocks to own right now.
Materials stocks, for the record, include the likes of miners (both for precious metals such as gold and silver, as well as more industrial metals such as copper and aluminum), steelmakers, fertilizer producers. They can make plastics, concrete, paper – effectively, the building blocks for a wide array of finished goods.
It's a cyclical sector, which means that as the economy goes, so go its component stocks. No wonder, then, that in a 2023 where a recession seems like a coin-flip proposition, Wall Street isn't exactly pumped about materials' prospects.
Consider these two points from John Butters, senior earnings analyst for FactSet Research Systems:
- \"At the sector level, 10 of the 11 sectors have seen a decline in their percentage of Buy ratings since the February 2022 peak, led by the industrials (to 49% from 55%) and materials (to 47% from 54%) sectors,\" he says, adding that materials has the highest percentage of Hold ratings, at 46%.
- \"The Materials sector has recorded the largest percentage decrease in estimated (dollar-level) earnings of all 11 sectors since the start of the quarter, at -13.9% (to $11.4 billion from $13.3 billion),\" he says. \"As a result, the estimated (year-over-year) earnings decline for this sector has increased to -36.1% today from -25.7% on Dec. 31.\"
That sour forecasts doesn't apply to every stock in the sector, however. In fact, we have found more than a few names with particularly rosy outlooks – at least as far as the pros are concerned.
Read on as we explore nine of the best materials stocks to buy right now. Each of the stocks has earned a consensus Buy or Strong Buy rating across the group of analysts that cover it – and we'll explain why the Street is so high on these stocks despite low expectations for the sector as a whole.
Data is as of April 4. Analyst ratings provided by S&P Global Market Intelligence. S&P surveys analysts' stock calls and scores them on a scale from 1.0 to 5.0, where 1.0 equals a Strong Buy and 5.0 is a Strong Sell. Any score higher than 3.5 means analysts, on average, rate the stock at Sell. The closer a score gets to 5.0, the stronger the consensus Sell recommendation.
\n![\"Avery](\"https://cdn.mos.cms.futurecdn.net/HLsHieFx6xEAPCBxK46YvV-1920-80.jpg.webp)
Avery Dennison
\n- Market value: $14.3 billion
- Dividend yield: 1.7%
- Analysts' consensus recommendation: 1.92 (Buy)
- Analysts' ratings: 6 Strong Buy, 3 Buy, 3 Hold, 1 Sell, 0 Strong Sell
Avery Dennison (AVY, $175.37) is a materials science company that specializes in packaging and labeling technologies. It produces everything from inks and vehicle graphics wrappers to pharmaceutical labels and even traffic signs.
But one of the biggest growth opportunities for this Mentor, Ohio-based materials stock is radio frequency identification (RFID) and digital IDs, which the company is helping to turn into smart labeling technologies.
\"RFID/Intelligent Labels present a significant opportunity for AVY,\" says Truist analyst Michael Roxland, who rates AVY at Buy. \"In 2023, AVY is targeting roughly $1 billion in sales, up about 25% year-over-year vs about $800 million in 2022.
\"Over the next several years, AVY expects 20%+ annual growth, partly driven by growth in other verticals including food, logistics, health & beauty, and automotive.\"
Its fourth-quarter financials, reported in February, included a 7.2% year-over-year decline in net sales largely driven by inventory destocking. However, CFRA maintained its Buy rating, expecting growth to resume later this year.
\"Although this inventory drawdown is putting significant pressure on financial results, we think a normalized growth trajectory will resume in Q2,\" says CFRA analyst Matthew Miller. \"The sudden decline in volume is indicative of patterns AVY has experienced in previous macro slowdowns and AVY has initiated temporary (and structural) cost reductions and is ramping up restructuring, as well as paring back capital spending in the base business.\"
A figure worth noting is a higher-than-peer-average 60% debt-to-capitalization ratio at the end of 2022. But Argus Research's David Coleman (Buy) notes that the figure was down from 63% a year earlier, and calls the debt load \"manageable.\"
A Buy camp of nine analysts, versus just three Holds and a lone Sell, put AVY shares among the Street's best materials stocks to buy now.
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\n![\"Corteva\"](\"https://cdn.mos.cms.futurecdn.net/nTtnZeQxrgZBePubtAE3mZ-1920-80.jpg.webp)
Corteva
\n- Market value: $43.0 billion
- Dividend yield: 1.0%
- Analysts' consensus recommendation: 1.91 (Buy)
- Analysts' ratings: 9 Strong Buy, 8 Buy, 5 Hold, 1 Sell, 0 Strong Sell
You know Dow (DOW). You know DuPont (DD). But you might not be as familiar with Corteva (CTVA, $60.40), the agriculture business that was spun off in 2019 from the then-combined DowDuPont.
Corteva is a global giant in the seed and crop protection industries. Its Seed segment develops advanced seeds that produce crops with optimum yields, can better withstand weather and are more resistant to disease and insects. Meanwhile, its Crop Protection division produces weedkillers, insecticides, nitrogen stabilizers and other plant-protecting chemicals.
CTVA is coming off a strong 2022 that saw shares jump 24% compared to a 19% drop for the S&P 500 and a 14% decline for the materials sector. That was backed by excellent 2022 operational results: Corteva enjoyed 11% year-over-year growth in revenues, while adjusted earnings jumped 24%. The company reported \"strong gains\" in all regions, with crop protection doing the heavy lifting with 17% net sales growth.
And the Street – which has 17 buys on the material stock, versus just five Holds and one Sell – largely thinks CTVA can build upon 2022's successes.
\"We forecast agriculture will remain robust in '23, and will bode well for CTVA, with high demand for grain and oilseeds, commodity prices above historical averages, and farmers prioritizing maximum yields as their income levels rise,\" says CFRA analyst Emily Nasseff Mitsch (Buy), who also points out the company's \"healthy\" balance sheet and \"attractive\" free cash flow, the latter of which Corteva is happy to reroute back to shareholders.
Indeed, CTVA bought back $800 million in shares last year as part of its $1.5 billion buyback authorization. It also has a regular dividend, which it raised by 7% in July 2022, to 15 cents per share quarterly.
Argus Research's Bill Selesky (Buy) also sees 2023 as a strong year for Corteva.
\"We expect Corteva … to benefit from its global scale, broad product range, and new product pipeline, as well as from strong demand for agricultural commodities,\" he says. \"We also expect U.S. planted acreage to favor corn over soybeans in 2023, which should benefit margins and earnings at Corteva.
\"In all, we believe that Corteva is entering a period of strong earnings growth.\"
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\n\n![\"Martin](\"https://cdn.mos.cms.futurecdn.net/k3MUkdy2vxiyEzuLAXgbq4-1920-80.jpg.webp)
Martin Marietta Materials
\n- Market value: $21.6 billion
- Dividend yield: 0.7%
- Analysts' consensus recommendation: 1.90 (Buy)
- Analysts' ratings: 9 Strong Buy, 4 Buy, 5 Hold, 1 Sell, 0 Strong Sell
Martin Marietta Materials (MLM, $347.55) is a building materials giant that deals in crushed stone, sand, gravel, ready-mixed concrete, asphalt and specialty cement. It also produces chemicals that are used in a variety of applications, from pulp and paper production to flame retardants.
MLM largely followed the broader homebuilding industry lower in 2022, losing roughly a quarter of its value across the year. There was hardly anything wrong with Martin Marietta's operating results – the company delivered 13% YoY revenue gains and a 22% profit jump in 2022 – but more of a comedown following a wild two-year rebound off the COVID lows.
\"We continue to like the industry and setup into 2023 and beyond,\" says Stifel's analyst team, which rates MLM shares at Buy. \"While residential markets remain uncertain, non-[residential] looks stable and infrastructure looks to be accelerating. Pricing remains robust across the board, and equally important, base level pricing has moved materially higher over the past 18 months ahead of what we'd expect to be several years of accelerating infrastructure volumes on the horizon.\"
Stifel has particular praise for the company's ability to succeed with \"larger, chunkier\" mergers and acquisitions – a strategy that \"has transformed the business and created a portfolio of coast to coast assets that would be prohibitive to replicate, in our view.\"
CFRA's Matthew Miller added a bullish view of MLM shares in February, raising his full-year target to $423 per share from $375 previously.
\"While we remain concerned about a slowdown in private construction activity, we are impressed with MLM's earnings growth with little to no volume growth,\" he says. \"We think it's a compelling time to invest in MLM, as we expect earnings growth to accelerate significantly when volume growth gets a boost from higher infrastructure investment combined with reshoring of U.S. supply chains.\"
Miller is one of 13 Buy-equivalent ratings on Martin Marietta, compared to just five Holds and one Sell for the materials stock.
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\n\n![\"O-I](\"https://cdn.mos.cms.futurecdn.net/8cnaTRjt9FoGQYTLPCqQcC-1920-80.jpg.webp)
O-I Glass
\n- Market value: $3.5 billion
- Dividend yield: N/A
- Analysts' consensus recommendation: 1.90 (Buy)
- Analysts' ratings: 5 Strong Buy, 2 Buy, 2 Hold, 1 Sell, 0 Strong Sell
Also known as Owens-Illinois, O-I Glass (OI, $22.46) is one of the world's top glass-container makers and sellers. Its glass products are sold to food and beverage manufacturers for use with beer and wine, soft drinks, juices, salad dressings, even pharmaceuticals.
Like with CTVA, the analyst set is convinced that the Perrysburg, Ohio-based O-I Glass can keep up the momentum from a stellar 2022 that saw OI shares rocket 38% higher.
\"In 2022, OI had great success at achieving its $1.5 billion portfolio optimization program (proceeds used to reduce debt and invest in expansion initiatives) and achieving a final resolution of its legacy asbestos liabilities,\" says CFRA analyst Matthew Miller, who upgraded his rating on OI shares to Buy in February and upped his 2023 earnings per share (EPS) estimate to $2.62 from $2.23 prior.
\"We have seen OI as a turnaround story and we think OI has officially turned the corner, entering 2023 with solid operating momentum,\" he says. \"In 2023, we think OI will only achieve volume growth of 1% (due to OI's record low inventory level), but margin expansion will be the story, driven by ongoing efficiency efforts. In 2024, we anticipate mid-single-digit volume growth.\"
Also optimistic is Truist's Michael Roxland (Buy), who upgraded his price target in February, to $27 per share from $23 previously. He not only sees considerable upside in 2023, but the chance for additional shareholder rewards come 2024.
\"In the near-term, the company will continue to focus on derisking its balance sheet and bringing leverage below 3x,\" he says. \"Once that is achieved, which we believe could happen by year-end, OI is likely to focus on increasing capital returns to shareholders.\"
OI makes this list of the top materials stocks by virtue of seven Buys versus just two Holds and one Sell.
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\n\n![\"Ashland\"](\"https://cdn.mos.cms.futurecdn.net/QbhfXJ9HYnGwoeJtzwKHBT-1920-80.jpg.webp)
Ashland
\n- Market value: $5.5 billion
- Dividend yield: 1.3%
- Analysts' consensus recommendation: 1.85 (Buy)
- Analysts' ratings: 7 Strong Buy, 2 Buy, 3 Hold, 1 Sell, 0 Strong Sell
Ashland (ASH, $101.41) is an extraordinarily diversified additives and special ingredients firm that operates across four segments: Life Sciences, Personal Care, Specialty Additives, and Intermediates.
It would almost be quicker to list what Ashland doesn't do. Its products are used in everything from sauces, dairy products and beverages, to hair, oral and skin care, to cement and ready-to-use plasters, to architectural paints and industrial coatings.
This material stock's robust portfolio makes it more defensive than most of the sector – a quality BMO Capital Markets' John McNulty likes going into 2023 and even 2024.
\"ASH continues to have a solid outlook that will drive double-digit EPS growth in [fiscal 2023] barring some notable setback in Europe and/or limited recovery in China post-COVID outbreaks,\" says McNulty, who rates the stock at Outperform (equivalent of Buy). \"We see its defensive characteristics, solid balance sheet and 2Q buyback as a positive for investors looking for relative safety in the current challenging environment and yet see the sizable capacity adds in a number of its sold-out platforms as affording the company growth in 2024 that will help it keep up with more cyclical names.\"
China dragged considerably on fiscal first-quarter results reported in late January, especially in the company's Personal Care and Specialty Additives lines. Adjusted net profits of 73 cents per share were 17% lower year-over-year. Regardless, Ashland reaffirmed its fiscal 2023 sales and adjusted EBITDA forecasts, which both project high-single-digit growth over FY22.
Argus Research's Bill Selesky lowered his earnings estimates following the report but reiterated his Buy rating on the stock.
\"We expect significant improvement in the coming quarters based on our expectations for better performance in Europe and the reopening of the Chinese economy,\" he says.
Ashland enjoys nine Buys versus just three Holds and one Sell, easily making it one of the best material stocks to buy, in the analysts' eyes.
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\n\n![\"Vulcan](\"https://cdn.mos.cms.futurecdn.net/2PWhbUbUxCEFFNgd9kfJ84-1920-80.jpg.webp)
Vulcan Materials
\n- Market value: $22.5 billion
- Dividend yield: 1.0%
- Analysts' consensus recommendation: 1.82 (Buy)
- Analysts' ratings: 11 Strong Buy, 5 Buy, 5 Hold, 1 Sell, 0 Strong Sell
Vulcan Materials (VMC, $168.86) is another building materials firm that operates via four segments: Aggregates, Asphalt, Concrete and Calcium. It's America's largest producer of construction aggregates, providing the raw materials used in houses, schools, commercial buildings, roads, airport runways and even sewers.
Like MLM, Vulcan had a difficult 2022 from a share perspective, losing more than 15%, but it was mostly a post-COVID-rally hangover. Financial results were just fine, with full-year revenues soaring by 32%, while profits improved by a modest 1.3%. Admittedly, VMC limped out of the year with a weak Q4 that saw earnings decline by 14%, but even then, it had the confidence to raise its payout by 7.5%, to 43 cents per share quarterly.
Argus Research's David Coleman (Buy) is looking past the fourth quarter, saying he expects the company to recover during this year's second half and in 2024.
\"We expect Vulcan to benefit from the Biden administration's infrastructure plan, as well as from price increases,\" he says. \"We also believe that Vulcan remains one of the best-positioned companies in the construction materials industry thanks to its size and scale, strong presence in high-growth geographic markets, and healthy balance sheet.\"
While VMC very well could be among the best materials stocks to buy now, that benefit from the Infrastructure Investment and Jobs Act might not come until next year.
\"In November of 2021, VMC believed it would take 18-24 months to see benefits which appears to be playing out this year,\" says Stifel's analyst team, which also has the stock at Buy. \"While state budget and award data has ramped significantly in recent months (partly driven by inflation), VMC pointed out that lettings/awards translating into shipments usually takes longer than expected. While VMC expects to see some benefits begin in 2H23 (resulting in LSD infrastructure growth in 2023), the full impact likely begins in 2024.\"
Better still: Vulcan's management believes the IIJA will provide five to seven years of steady growth in infrastructure shipments, Stifel says.
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\n\n![\"Linde\"](\"https://cdn.mos.cms.futurecdn.net/9z8hdFm7Lirt7dvJBCDXTU-1920-80.jpg.webp)
Linde
\n- Market value: $176.1 billion
- Dividend yield: 1.4%
- Analysts' consensus recommendation: 1.63 (Buy)
- Analysts' ratings: 13 Strong Buy, 7 Buy, 4 Hold, 0 Sell, 0 Strong Sell
Materials stocks aren't exactly known for generous dividends, and Linde (LIN, $357.80) is no exception, yielding slightly less than the S&P 500 at present.
But it is one of the best dividend growth stocks.
U.K.-based Linde is a member of the S&P 500 Dividend Aristocrats, by virtue of its 2018 merger with then-Aristocrat Praxair. It boasts three decades of uninterrupted annual payout growth, including a 9% raise in February that marked its 30th year of dividend hikes.
As for the business itself: Linde is a global industrial gas company that produces argon, carbon dioxide, electronic cases, helium, hydrogen, nitrogen, oxygen and numerous other gases. The applications are endless, from extracting gold to powering flat-screen TVs to making wine.
Linde finished in the red last year, but only by 6% to easily outdo the broader market and materials sector. It exited 2022 with a strong fourth quarter that saw adjusted EPS pop by 35% despite difficulties in Europe and China, as well as a slowdown in electronics.
Wall Street is plenty bullish on the name: 20 analysts give it a Buy rating, versus four Holds and no Sells.
\"Looking ahead to 2023, robust price/volumes, gains from efficiency, new projects and tailwinds from a normalized energy/power cost environment should all drive LIN toward/above the higher-end of its double-digit EPS growth range,\" says BMO analyst John McNulty (Outperform), who calls LIN one of the firm's Top Large-Cap Picks. \"We also see an acceleration of long-term earnings growth as LIN adds more blue/green H2 projects to their plate in the near future.\"
CFRA's Matthew Miller (Buy) is also in the Linde bull camp.
\"We expect strong financial results in '23 to be driven by price attainment in all geographic segments and less of a headwind from foreign exchange, resulting in significant operating leverage,\" he says. Miller predicts LIN will grow sales 7.1% year-over-year, leading to a 12.6% improvement in profits.
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\n\n![\"MP](\"https://dev.mos.cms.futurecdn.net/TdjCucMbdyoE2jf2JakLeJ-1920-80.jpg.webp)
MP Materials
\n- Market value: $4.9 billion
- Dividend yield: N/A
- Analysts' consensus recommendation: 1.27 (Strong Buy)
- Analysts' ratings: 9 Strong Buy, 1 Buy, 1 Hold, 0 Sell, 0 Strong Sell
MP Materials (MP, $27.29) is a materials company based in Las Vegas, Nevada, that operates America's only rare-earth mine and processing facility. Rare earths are a vital component in numerous industries, including technology and clean energy.
One of the biggest applications of MP's rare earths is in the automobile industry. Neodymium and praseodymium are used in the motors of electric cars, for instance, and cerium is used in automotive catalysts. However, a combination of rising interest rates and recessionary fears dampened auto-sales projections last year – that and other headwinds nearly halved MP shares in 2022.
MP rebounded strong to start 2023, up nearly 50% in the first two months. But an early March announcement from Tesla (TSLA) has erased the vast majority of those gains. Specifically, Tesla said that its next generation of EV motors wouldn't contain rare earths.
Despite this, the pros remain almost unanimously bullish – MP is one of the best materials stocks to buy, per their ratings, at 10 Buy calls versus a lone hold.
CFRA (Strong Buy), for instance, believes shares have 77% upside from current prices.
\"There have always been alternatives to rare earths when producing permanent magnets used in electric motors, but our view is that choosing to build a permanent magnet motor without neodymium-praseodymium (NdPr) will most certainly be an inferior product to NdPr magnetics,\" says CFRA analyst Matthew Miller, who calls MP shares one of \"the most compelling ways\" to play decarbonization. \"It's also important to keep the news from Tesla in context. If NdPr only gains a small market share of EV motor production over the next decade, this will represent significant growth from today's consumption and the demand from wind turbines, drones, and robotics is also expected to stay strong.\"
BofA Global Research's analyst team, which also rates MP shares at Buy, echoes Miller's thoughts.
\"While we do acknowledge the downside risks posed by current or future technological developments, the strong long-term growth outlook for permanent magnet use in EV's/wind turbines (expected to grow 2-3x by 2035), suggest there may be enough room for multiple technologies to co-exist,\" BofA says. \"Further, there is a significant (though lower growth) market for these rare earths outside of EV/wind turbine applications that amount to 80% of estimated consumption.\"
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\n\n![\"Avient\"](\"https://cdn.mos.cms.futurecdn.net/Etgw74PRC8PzARwvgSqKZ9-1920-80.jpg.webp)
Avient
\n- Market value: $3.7 billion
- Dividend yield: 2.4%
- Analysts' consensus recommendation: 1.25 (Strong Buy)
- Analysts' ratings: 7 Strong Buy, 0 Buy, 1 Hold, 0 Sell, 0 Strong Sell
The top materials stock on our list delivered an absolute stinker of a 2022.
Avon Lake, Ohio-based Avient (AVNT, $39.96) is a global materials play that specializes in engineered materials, advanced composites, polymer color systems and more. Its products range from screen printing inks to foaming agents to high-performance synthetic fibers to tubing materials.
The company struggled mightily in 2022 – the war in Ukraine, China's COVID lockdowns, rising energy costs, rising interest rates and inflation in the U.S. and Canada were all among bugaboos cited in Avient's earnings reports last year.
But the pros say it's just a matter of time before AVNT recovers.
\"While the demand environment will likely continue in 1H23, raw material price deflation and more favorable [foreign exchange] impacts provide upside to estimates,\" says Baird analyst Ben Kallo, who rates the stock at Outperform. \"We expect demand to recover gradually in 2H23 and are optimistic that the most significant impacts of inflationary pressures are behind AVNT.\"
Oppenheimer upgraded the stock to Outperform in February, seeing a similar recovery timeframe as Baird.
\"With the stock returning to pre-3Q preliminary guidance levels, our thesis assumes that destocking headwinds persist into 1Q with revenue bottoming out in 1H driven by crosswinds of moderating inflation, gradual China reopening, and Europe remaining resilient,\" says Oppenheimer's analyst team.
Avient isn't just the top materials stock to buy, according to the pros – its consensus Strong Buy rating makes it one of the top stocks period. We will note that Avient has a smaller analyst crowd than many larger firms, with just eight analysts – but seven of those eight are extremely bullish on the stock, while the lone dissenter remains on the sidelines at Hold.
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\n\n \n\n\n\n\n![\"AI](\"https://vanilla.futurecdn.net/kiplinger/missing-image.svg\")
\n\nThe Robots Are Coming... But Not For a While\n\n\n\n\nThe Kiplinger Letter\nThere’s excitement in the tech sector over the potential of humanoid robots, but widespread adoption is likely to be years away.\n
\n\nBy John Miley\n\nPublished \n\n
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\n\n \n\n\n\n\n\nThe Magnificent Seven have been driving stock returns. Here, we take a close look at the mega-cap hotshots to see what's next.\n
\n\nBy Nellie S. Huang\n\nPublished \n\n
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\n\n \n\n\n\n\n\nESG\nGreen hydrogen is in its relative infancy, making related stocks quite volatile. But long-term investors can use that to their advantage.\n
\n\nBy Coryanne Hicks\n\nPublished \n\n
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\n\n \n\n\n\n\n\nStock Market Today\nEnergy and materials stocks led the way Wednesday as good (albeit not great) economic data was enough to push the Dow to new highs.\n
\n\nBy Kyle Woodley\n\nPublished \n\n
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![\"3D](\"https://dev.mos.cms.futurecdn.net/p2FExrwtbFik2pWfyWjtHH-230-80.jpg.webp)
![\"Oil](\"https://cdn.mos.cms.futurecdn.net/uMskYMg8Je4qTbqSAGK6BQ-230-80.jpg.webp)
The 9 Best Materials Stocks to Buy Now
\nThe short-term outlook for materials stocks is low, but these nine names could be diamonds in the rough.
\n\nMaterials stocks aren't exactly glamorous in most years, but Wall Street's experts expect some particularly dull results from the sector this year.
That doesn't mean there aren't a few diamonds in the rough, however. We've recently sifted through the sector to find the best stocks to buy in the space – nine picks that the pros believe are among best materials stocks to own right now.
Materials stocks, for the record, include the likes of miners (both for precious metals such as gold and silver, as well as more industrial metals such as copper and aluminum), steelmakers, fertilizer producers. They can make plastics, concrete, paper – effectively, the building blocks for a wide array of finished goods.
It's a cyclical sector, which means that as the economy goes, so go its component stocks. No wonder, then, that in a 2023 where a recession seems like a coin-flip proposition, Wall Street isn't exactly pumped about materials' prospects.
Consider these two points from John Butters, senior earnings analyst for FactSet Research Systems:
- \"At the sector level, 10 of the 11 sectors have seen a decline in their percentage of Buy ratings since the February 2022 peak, led by the industrials (to 49% from 55%) and materials (to 47% from 54%) sectors,\" he says, adding that materials has the highest percentage of Hold ratings, at 46%.
- \"The Materials sector has recorded the largest percentage decrease in estimated (dollar-level) earnings of all 11 sectors since the start of the quarter, at -13.9% (to $11.4 billion from $13.3 billion),\" he says. \"As a result, the estimated (year-over-year) earnings decline for this sector has increased to -36.1% today from -25.7% on Dec. 31.\"
That sour forecasts doesn't apply to every stock in the sector, however. In fact, we have found more than a few names with particularly rosy outlooks – at least as far as the pros are concerned.
Read on as we explore nine of the best materials stocks to buy right now. Each of the stocks has earned a consensus Buy or Strong Buy rating across the group of analysts that cover it – and we'll explain why the Street is so high on these stocks despite low expectations for the sector as a whole.
Data is as of April 4. Analyst ratings provided by S&P Global Market Intelligence. S&P surveys analysts' stock calls and scores them on a scale from 1.0 to 5.0, where 1.0 equals a Strong Buy and 5.0 is a Strong Sell. Any score higher than 3.5 means analysts, on average, rate the stock at Sell. The closer a score gets to 5.0, the stronger the consensus Sell recommendation.
\nAvery Dennison
\n- Market value: $14.3 billion
- Dividend yield: 1.7%
- Analysts' consensus recommendation: 1.92 (Buy)
- Analysts' ratings: 6 Strong Buy, 3 Buy, 3 Hold, 1 Sell, 0 Strong Sell
Avery Dennison (AVY, $175.37) is a materials science company that specializes in packaging and labeling technologies. It produces everything from inks and vehicle graphics wrappers to pharmaceutical labels and even traffic signs.
But one of the biggest growth opportunities for this Mentor, Ohio-based materials stock is radio frequency identification (RFID) and digital IDs, which the company is helping to turn into smart labeling technologies.
\"RFID/Intelligent Labels present a significant opportunity for AVY,\" says Truist analyst Michael Roxland, who rates AVY at Buy. \"In 2023, AVY is targeting roughly $1 billion in sales, up about 25% year-over-year vs about $800 million in 2022.
\"Over the next several years, AVY expects 20%+ annual growth, partly driven by growth in other verticals including food, logistics, health & beauty, and automotive.\"
Its fourth-quarter financials, reported in February, included a 7.2% year-over-year decline in net sales largely driven by inventory destocking. However, CFRA maintained its Buy rating, expecting growth to resume later this year.
\"Although this inventory drawdown is putting significant pressure on financial results, we think a normalized growth trajectory will resume in Q2,\" says CFRA analyst Matthew Miller. \"The sudden decline in volume is indicative of patterns AVY has experienced in previous macro slowdowns and AVY has initiated temporary (and structural) cost reductions and is ramping up restructuring, as well as paring back capital spending in the base business.\"
A figure worth noting is a higher-than-peer-average 60% debt-to-capitalization ratio at the end of 2022. But Argus Research's David Coleman (Buy) notes that the figure was down from 63% a year earlier, and calls the debt load \"manageable.\"
A Buy camp of nine analysts, versus just three Holds and a lone Sell, put AVY shares among the Street's best materials stocks to buy now.
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\n\nCorteva
\n- Market value: $43.0 billion
- Dividend yield: 1.0%
- Analysts' consensus recommendation: 1.91 (Buy)
- Analysts' ratings: 9 Strong Buy, 8 Buy, 5 Hold, 1 Sell, 0 Strong Sell
You know Dow (DOW). You know DuPont (DD). But you might not be as familiar with Corteva (CTVA, $60.40), the agriculture business that was spun off in 2019 from the then-combined DowDuPont.
Corteva is a global giant in the seed and crop protection industries. Its Seed segment develops advanced seeds that produce crops with optimum yields, can better withstand weather and are more resistant to disease and insects. Meanwhile, its Crop Protection division produces weedkillers, insecticides, nitrogen stabilizers and other plant-protecting chemicals.
CTVA is coming off a strong 2022 that saw shares jump 24% compared to a 19% drop for the S&P 500 and a 14% decline for the materials sector. That was backed by excellent 2022 operational results: Corteva enjoyed 11% year-over-year growth in revenues, while adjusted earnings jumped 24%. The company reported \"strong gains\" in all regions, with crop protection doing the heavy lifting with 17% net sales growth.
And the Street – which has 17 buys on the material stock, versus just five Holds and one Sell – largely thinks CTVA can build upon 2022's successes.
\"We forecast agriculture will remain robust in '23, and will bode well for CTVA, with high demand for grain and oilseeds, commodity prices above historical averages, and farmers prioritizing maximum yields as their income levels rise,\" says CFRA analyst Emily Nasseff Mitsch (Buy), who also points out the company's \"healthy\" balance sheet and \"attractive\" free cash flow, the latter of which Corteva is happy to reroute back to shareholders.
Indeed, CTVA bought back $800 million in shares last year as part of its $1.5 billion buyback authorization. It also has a regular dividend, which it raised by 7% in July 2022, to 15 cents per share quarterly.
Argus Research's Bill Selesky (Buy) also sees 2023 as a strong year for Corteva.
\"We expect Corteva … to benefit from its global scale, broad product range, and new product pipeline, as well as from strong demand for agricultural commodities,\" he says. \"We also expect U.S. planted acreage to favor corn over soybeans in 2023, which should benefit margins and earnings at Corteva.
\"In all, we believe that Corteva is entering a period of strong earnings growth.\"
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\n\nMartin Marietta Materials
\n- Market value: $21.6 billion
- Dividend yield: 0.7%
- Analysts' consensus recommendation: 1.90 (Buy)
- Analysts' ratings: 9 Strong Buy, 4 Buy, 5 Hold, 1 Sell, 0 Strong Sell
Martin Marietta Materials (MLM, $347.55) is a building materials giant that deals in crushed stone, sand, gravel, ready-mixed concrete, asphalt and specialty cement. It also produces chemicals that are used in a variety of applications, from pulp and paper production to flame retardants.
MLM largely followed the broader homebuilding industry lower in 2022, losing roughly a quarter of its value across the year. There was hardly anything wrong with Martin Marietta's operating results – the company delivered 13% YoY revenue gains and a 22% profit jump in 2022 – but more of a comedown following a wild two-year rebound off the COVID lows.
\"We continue to like the industry and setup into 2023 and beyond,\" says Stifel's analyst team, which rates MLM shares at Buy. \"While residential markets remain uncertain, non-[residential] looks stable and infrastructure looks to be accelerating. Pricing remains robust across the board, and equally important, base level pricing has moved materially higher over the past 18 months ahead of what we'd expect to be several years of accelerating infrastructure volumes on the horizon.\"
Stifel has particular praise for the company's ability to succeed with \"larger, chunkier\" mergers and acquisitions – a strategy that \"has transformed the business and created a portfolio of coast to coast assets that would be prohibitive to replicate, in our view.\"
CFRA's Matthew Miller added a bullish view of MLM shares in February, raising his full-year target to $423 per share from $375 previously.
\"While we remain concerned about a slowdown in private construction activity, we are impressed with MLM's earnings growth with little to no volume growth,\" he says. \"We think it's a compelling time to invest in MLM, as we expect earnings growth to accelerate significantly when volume growth gets a boost from higher infrastructure investment combined with reshoring of U.S. supply chains.\"
Miller is one of 13 Buy-equivalent ratings on Martin Marietta, compared to just five Holds and one Sell for the materials stock.
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\n\nO-I Glass
\n- Market value: $3.5 billion
- Dividend yield: N/A
- Analysts' consensus recommendation: 1.90 (Buy)
- Analysts' ratings: 5 Strong Buy, 2 Buy, 2 Hold, 1 Sell, 0 Strong Sell
Also known as Owens-Illinois, O-I Glass (OI, $22.46) is one of the world's top glass-container makers and sellers. Its glass products are sold to food and beverage manufacturers for use with beer and wine, soft drinks, juices, salad dressings, even pharmaceuticals.
Like with CTVA, the analyst set is convinced that the Perrysburg, Ohio-based O-I Glass can keep up the momentum from a stellar 2022 that saw OI shares rocket 38% higher.
\"In 2022, OI had great success at achieving its $1.5 billion portfolio optimization program (proceeds used to reduce debt and invest in expansion initiatives) and achieving a final resolution of its legacy asbestos liabilities,\" says CFRA analyst Matthew Miller, who upgraded his rating on OI shares to Buy in February and upped his 2023 earnings per share (EPS) estimate to $2.62 from $2.23 prior.
\"We have seen OI as a turnaround story and we think OI has officially turned the corner, entering 2023 with solid operating momentum,\" he says. \"In 2023, we think OI will only achieve volume growth of 1% (due to OI's record low inventory level), but margin expansion will be the story, driven by ongoing efficiency efforts. In 2024, we anticipate mid-single-digit volume growth.\"
Also optimistic is Truist's Michael Roxland (Buy), who upgraded his price target in February, to $27 per share from $23 previously. He not only sees considerable upside in 2023, but the chance for additional shareholder rewards come 2024.
\"In the near-term, the company will continue to focus on derisking its balance sheet and bringing leverage below 3x,\" he says. \"Once that is achieved, which we believe could happen by year-end, OI is likely to focus on increasing capital returns to shareholders.\"
OI makes this list of the top materials stocks by virtue of seven Buys versus just two Holds and one Sell.
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\n\nAshland
\n- Market value: $5.5 billion
- Dividend yield: 1.3%
- Analysts' consensus recommendation: 1.85 (Buy)
- Analysts' ratings: 7 Strong Buy, 2 Buy, 3 Hold, 1 Sell, 0 Strong Sell
Ashland (ASH, $101.41) is an extraordinarily diversified additives and special ingredients firm that operates across four segments: Life Sciences, Personal Care, Specialty Additives, and Intermediates.
It would almost be quicker to list what Ashland doesn't do. Its products are used in everything from sauces, dairy products and beverages, to hair, oral and skin care, to cement and ready-to-use plasters, to architectural paints and industrial coatings.
This material stock's robust portfolio makes it more defensive than most of the sector – a quality BMO Capital Markets' John McNulty likes going into 2023 and even 2024.
\"ASH continues to have a solid outlook that will drive double-digit EPS growth in [fiscal 2023] barring some notable setback in Europe and/or limited recovery in China post-COVID outbreaks,\" says McNulty, who rates the stock at Outperform (equivalent of Buy). \"We see its defensive characteristics, solid balance sheet and 2Q buyback as a positive for investors looking for relative safety in the current challenging environment and yet see the sizable capacity adds in a number of its sold-out platforms as affording the company growth in 2024 that will help it keep up with more cyclical names.\"
China dragged considerably on fiscal first-quarter results reported in late January, especially in the company's Personal Care and Specialty Additives lines. Adjusted net profits of 73 cents per share were 17% lower year-over-year. Regardless, Ashland reaffirmed its fiscal 2023 sales and adjusted EBITDA forecasts, which both project high-single-digit growth over FY22.
Argus Research's Bill Selesky lowered his earnings estimates following the report but reiterated his Buy rating on the stock.
\"We expect significant improvement in the coming quarters based on our expectations for better performance in Europe and the reopening of the Chinese economy,\" he says.
Ashland enjoys nine Buys versus just three Holds and one Sell, easily making it one of the best material stocks to buy, in the analysts' eyes.
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\n\nVulcan Materials
\n- Market value: $22.5 billion
- Dividend yield: 1.0%
- Analysts' consensus recommendation: 1.82 (Buy)
- Analysts' ratings: 11 Strong Buy, 5 Buy, 5 Hold, 1 Sell, 0 Strong Sell
Vulcan Materials (VMC, $168.86) is another building materials firm that operates via four segments: Aggregates, Asphalt, Concrete and Calcium. It's America's largest producer of construction aggregates, providing the raw materials used in houses, schools, commercial buildings, roads, airport runways and even sewers.
Like MLM, Vulcan had a difficult 2022 from a share perspective, losing more than 15%, but it was mostly a post-COVID-rally hangover. Financial results were just fine, with full-year revenues soaring by 32%, while profits improved by a modest 1.3%. Admittedly, VMC limped out of the year with a weak Q4 that saw earnings decline by 14%, but even then, it had the confidence to raise its payout by 7.5%, to 43 cents per share quarterly.
Argus Research's David Coleman (Buy) is looking past the fourth quarter, saying he expects the company to recover during this year's second half and in 2024.
\"We expect Vulcan to benefit from the Biden administration's infrastructure plan, as well as from price increases,\" he says. \"We also believe that Vulcan remains one of the best-positioned companies in the construction materials industry thanks to its size and scale, strong presence in high-growth geographic markets, and healthy balance sheet.\"
While VMC very well could be among the best materials stocks to buy now, that benefit from the Infrastructure Investment and Jobs Act might not come until next year.
\"In November of 2021, VMC believed it would take 18-24 months to see benefits which appears to be playing out this year,\" says Stifel's analyst team, which also has the stock at Buy. \"While state budget and award data has ramped significantly in recent months (partly driven by inflation), VMC pointed out that lettings/awards translating into shipments usually takes longer than expected. While VMC expects to see some benefits begin in 2H23 (resulting in LSD infrastructure growth in 2023), the full impact likely begins in 2024.\"
Better still: Vulcan's management believes the IIJA will provide five to seven years of steady growth in infrastructure shipments, Stifel says.
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\n\nLinde
\n- Market value: $176.1 billion
- Dividend yield: 1.4%
- Analysts' consensus recommendation: 1.63 (Buy)
- Analysts' ratings: 13 Strong Buy, 7 Buy, 4 Hold, 0 Sell, 0 Strong Sell
Materials stocks aren't exactly known for generous dividends, and Linde (LIN, $357.80) is no exception, yielding slightly less than the S&P 500 at present.
But it is one of the best dividend growth stocks.
U.K.-based Linde is a member of the S&P 500 Dividend Aristocrats, by virtue of its 2018 merger with then-Aristocrat Praxair. It boasts three decades of uninterrupted annual payout growth, including a 9% raise in February that marked its 30th year of dividend hikes.
As for the business itself: Linde is a global industrial gas company that produces argon, carbon dioxide, electronic cases, helium, hydrogen, nitrogen, oxygen and numerous other gases. The applications are endless, from extracting gold to powering flat-screen TVs to making wine.
Linde finished in the red last year, but only by 6% to easily outdo the broader market and materials sector. It exited 2022 with a strong fourth quarter that saw adjusted EPS pop by 35% despite difficulties in Europe and China, as well as a slowdown in electronics.
Wall Street is plenty bullish on the name: 20 analysts give it a Buy rating, versus four Holds and no Sells.
\"Looking ahead to 2023, robust price/volumes, gains from efficiency, new projects and tailwinds from a normalized energy/power cost environment should all drive LIN toward/above the higher-end of its double-digit EPS growth range,\" says BMO analyst John McNulty (Outperform), who calls LIN one of the firm's Top Large-Cap Picks. \"We also see an acceleration of long-term earnings growth as LIN adds more blue/green H2 projects to their plate in the near future.\"
CFRA's Matthew Miller (Buy) is also in the Linde bull camp.
\"We expect strong financial results in '23 to be driven by price attainment in all geographic segments and less of a headwind from foreign exchange, resulting in significant operating leverage,\" he says. Miller predicts LIN will grow sales 7.1% year-over-year, leading to a 12.6% improvement in profits.
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\n\nMP Materials
\n- Market value: $4.9 billion
- Dividend yield: N/A
- Analysts' consensus recommendation: 1.27 (Strong Buy)
- Analysts' ratings: 9 Strong Buy, 1 Buy, 1 Hold, 0 Sell, 0 Strong Sell
MP Materials (MP, $27.29) is a materials company based in Las Vegas, Nevada, that operates America's only rare-earth mine and processing facility. Rare earths are a vital component in numerous industries, including technology and clean energy.
One of the biggest applications of MP's rare earths is in the automobile industry. Neodymium and praseodymium are used in the motors of electric cars, for instance, and cerium is used in automotive catalysts. However, a combination of rising interest rates and recessionary fears dampened auto-sales projections last year – that and other headwinds nearly halved MP shares in 2022.
MP rebounded strong to start 2023, up nearly 50% in the first two months. But an early March announcement from Tesla (TSLA) has erased the vast majority of those gains. Specifically, Tesla said that its next generation of EV motors wouldn't contain rare earths.
Despite this, the pros remain almost unanimously bullish – MP is one of the best materials stocks to buy, per their ratings, at 10 Buy calls versus a lone hold.
CFRA (Strong Buy), for instance, believes shares have 77% upside from current prices.
\"There have always been alternatives to rare earths when producing permanent magnets used in electric motors, but our view is that choosing to build a permanent magnet motor without neodymium-praseodymium (NdPr) will most certainly be an inferior product to NdPr magnetics,\" says CFRA analyst Matthew Miller, who calls MP shares one of \"the most compelling ways\" to play decarbonization. \"It's also important to keep the news from Tesla in context. If NdPr only gains a small market share of EV motor production over the next decade, this will represent significant growth from today's consumption and the demand from wind turbines, drones, and robotics is also expected to stay strong.\"
BofA Global Research's analyst team, which also rates MP shares at Buy, echoes Miller's thoughts.
\"While we do acknowledge the downside risks posed by current or future technological developments, the strong long-term growth outlook for permanent magnet use in EV's/wind turbines (expected to grow 2-3x by 2035), suggest there may be enough room for multiple technologies to co-exist,\" BofA says. \"Further, there is a significant (though lower growth) market for these rare earths outside of EV/wind turbine applications that amount to 80% of estimated consumption.\"
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\n\nAvient
\n- Market value: $3.7 billion
- Dividend yield: 2.4%
- Analysts' consensus recommendation: 1.25 (Strong Buy)
- Analysts' ratings: 7 Strong Buy, 0 Buy, 1 Hold, 0 Sell, 0 Strong Sell
The top materials stock on our list delivered an absolute stinker of a 2022.
Avon Lake, Ohio-based Avient (AVNT, $39.96) is a global materials play that specializes in engineered materials, advanced composites, polymer color systems and more. Its products range from screen printing inks to foaming agents to high-performance synthetic fibers to tubing materials.
The company struggled mightily in 2022 – the war in Ukraine, China's COVID lockdowns, rising energy costs, rising interest rates and inflation in the U.S. and Canada were all among bugaboos cited in Avient's earnings reports last year.
But the pros say it's just a matter of time before AVNT recovers.
\"While the demand environment will likely continue in 1H23, raw material price deflation and more favorable [foreign exchange] impacts provide upside to estimates,\" says Baird analyst Ben Kallo, who rates the stock at Outperform. \"We expect demand to recover gradually in 2H23 and are optimistic that the most significant impacts of inflationary pressures are behind AVNT.\"
Oppenheimer upgraded the stock to Outperform in February, seeing a similar recovery timeframe as Baird.
\"With the stock returning to pre-3Q preliminary guidance levels, our thesis assumes that destocking headwinds persist into 1Q with revenue bottoming out in 1H driven by crosswinds of moderating inflation, gradual China reopening, and Europe remaining resilient,\" says Oppenheimer's analyst team.
Avient isn't just the top materials stock to buy, according to the pros – its consensus Strong Buy rating makes it one of the top stocks period. We will note that Avient has a smaller analyst crowd than many larger firms, with just eight analysts – but seven of those eight are extremely bullish on the stock, while the lone dissenter remains on the sidelines at Hold.
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\n\n \n\n\n\n\n\nThe Kiplinger Letter\nThere’s excitement in the tech sector over the potential of humanoid robots, but widespread adoption is likely to be years away.\n
\n\nBy John Miley\n\nPublished \n\n
\n \n - \n
\n\n \n\n\n\n\n\nThe Magnificent Seven have been driving stock returns. Here, we take a close look at the mega-cap hotshots to see what's next.\n
\n\nBy Nellie S. Huang\n\nPublished \n\n
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\n\n \n\n\n\n\n\nESG\nGreen hydrogen is in its relative infancy, making related stocks quite volatile. But long-term investors can use that to their advantage.\n
\n\nBy Coryanne Hicks\n\nPublished \n\n
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\n\n \n\n\n\n\n\nStock Market Today\nEnergy and materials stocks led the way Wednesday as good (albeit not great) economic data was enough to push the Dow to new highs.\n
\n\nBy Kyle Woodley\n\nPublished \n\n
\n \n\n
\n\n\nBest IPO Stocks to Watch in 2024
\nKey Points
\n- \n
- \n\n\n\nThe IPO market is heating up after a long lull.\n \n
- \n\n\n\nAmong the recent debuts are Instacart, Birkenstock, and Arm.\n \n
- \n\n\n\nIPO stocks are significantly riskier than the broad market.\n \n
- \n\n\n\n\n \n
If you\u2019re looking for hot growth stocks, IPOs are a great place to start your search. These freshly minted public companies tend to make a splash in the market with big growth expectations and high price tags to match. Although not every IPO stock will be a winner, some of the most valuable companies in the world, such as Amazon (AMZN 0.9%) and Apple (AAPL -1.28%), were once IPOs, or initial public offerings, and have turned early investors into millionaires.
What is an IPO?
\nIPOs to watch
IPO stocks to watch in 2024
After a boom in IPOs during the pandemic, the market went ice cold in 2022 as tech stocks plunged and interest rates soared.
However, as the Nasdaq has bounced back in 2023, the IPO market has showed signs of life once again with several new issues debuting in September and beyond.
\nAmong the recent IPOs to watch are the following:
1. Instacart
Grocery delivery specialist Instacart (CART -1.13%) had been mulling an IPO for years before it finally pulled the trigger on the debut in September 2023.
Instacart's business took off during the pandemic. It was a natural fit with the stay-at-home period when Americans were reluctant to visit grocery stores.
Although you might guess that the business has receded since then -- like a number of e-commerce winners -- Instacart has continued to grow, building an impressive advertising business as well.
Its gross transaction value reached $29 billion in 2022, up 16% from 2021, and total revenue jumped 39% to $2.55 billion. Instacart is also profitable on the basis of adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA).
The addressable market in grocery is massive at roughly $1 trillion, and Instacart is the leading e-commerce platform for supermarkets. If the company executes on its growth plan, the stock has a lot of room to run higher.
\n2. Birkenstock
A 249-year-old sandal brand isn't your typical IPO, but Birkenstock (BIRK 1.04%) broke the mold when it went public in September.
Birkenstock might be a timeless brand, but the company has changed a lot in the last 10 years. The family that owns the company brought in professional management, which launched the Birkenstock.com website, opened company-owned stores, and took control of its distribution network, driving strong revenue growth and margin expansion. That's enabled it to raise its average selling prices, and it's introduced new models and expanded its product selection.
The company also received an investment from the family investment arm of LVMH (LVMHF 1.13%) founder Bernard Arnault, helping to forge a partnership with a luxury conglomerate.
Recent results have been strong. In 2022, revenue rose 29% to $1.24 billion, and it reported an adjusted EBITDA margin of 35%.
A number of footwear stocks have come before Birkenstock and delivered strong returns. With its well-known brand and capable management team, Birkenstock could be the next winner from the footwear industry.
\n3. Arm Holdings
Semiconductor stocks have attracted a lot of attention this year as demand for artificial intelligence capabilities has driven a surge in stocks like NVIDIA (NVDA -2.82%), so it's not surprising that Arm Holdings (ARM 0.54%) took advantage of that moment to go public.
Arm is known for making central processing units (CPUs), but it's expanded into graphics processing units (GPUs), and it also makes microprocessors.
Arm uses a special kind of architecture called RISC (reduced instruction set computer), which makes it easier for computers to receive the code that makes them run.
Like other chip stocks, Arm has struggled with the slowdown in the industry since the pandemic boom, with a supply glut affecting demand and pricing. Consequently, revenue and profits fell slightly in its most recent fiscal year, but the company should return to growth soon. If it can capitalize on the demand for AI chips, its profits could soar.
\n![\"Icon](\"https://m.foolcdn.com/media/dubs/images/Vector_5.width-300.png\")
\nUpcoming IPOs
Upcoming IPOs: Companies going public in 2023
Here are some other big-name companies with plans to go public in 2023 or 2024.
1. Stripe
As the most valuable privately held tech start-up in the U.S., digital payments company Stripe may be the most anticipated IPO out there. While the company has not announced plans to go public, Reuters reported that Stripe had taken its first step toward a market debut, tapping a law firm to guide it through the process. The wire service also said the company was planning on a direct listing instead of a traditional IPO since it doesn\u2019t need to raise new funds.
Stripe, which provides cloud software that allows businesses to seamlessly process payments, took a valuation cut from $95 billion to $50 billion due to the crash in tech stocks. Given that valuation, it\u2019s not surprising that a listing would be imminent since early investors and insiders need the company to go public to cash out their holdings. Management has said it will make a decision on an IPO by the end of the year.
\n2. Reddit
Social media platform Reddit has been eyeing an IPO since at least 2021, but the crash in tech stocks spoiled its earlier ambitions.
However, the company is rumored to be going public, possibly before the end of 2023.
\nThe Information reported back in February that Reddit was aiming to go public before the end of the year. According to media reports, it had been targeting a valuation of $15 billion, although it's unclear if Wall Street would value it that highly since social media stocks have generally fallen over the last couple of years. The company was valued at $10 billion at its last funding round in August 2021.
\nFrequently asked questions
\nWhat is an IPO in stocks?
\n\n\nAn IPO stands for initial public offering. It refers to a company's making its shares for public ownership and trading. When the stock IPOs, it lists on a stock exchange and begins trading.
\nIs it a good idea to buy IPO stocks?
\n\n\nIPO stocks tend to be riskier than the broad stock market since these are new issues that investors are still evaluating, and the stocks are searching for their equilibrium point.
IPOs often underperform the market due to the euphoria that surrounds them when they go public, but some IPO stocks go on to be big winners.
\nWhat's the best IPO to buy now?
\n\n\nOne of the more intriguing IPOs on the market today is Arm, the chipmaker. Given the rising demand for AI chips, ARM could find itself in a fortuitous position in the coming months if demand for chips continues to rise.
\nHow do I invest in IPO stocks?
\n\n\nInvesting in IPOs once they've started trading is just like buying any other stock. If you want to buy shares before they start trading, the best thing you can do is contact your brokerage and see if you can subscribe to the IPO allotment.
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