Commodities are still in high demand due to the worldwide supply shortage. They are becoming a good hedge against the Fed’s raising cycle as the globe watches copper, oil, nickel, and wheat prices surge, worsened by the War with Russia-Ukraine. Oil jumped above $130 per barrel earlier this year, gold surged to a high of $2,070 an ounce, and post-pandemic global supply chain interruptions are only worsening on the heels of the Russia-Ukraine conflict, prompting investors to consider commodities ranging from energy to agricultural to diversified portfolios.
According to recent data, many raw materials are trading in backwardation – which is when the current price of a commodity is greater than the price in the futures market – which hasn’t happened since 1997. Many commodity futures are also in backwardation, emphasizing the scarcity of supply and driving up prices.
Since inflation has managed to get away from them, the Fed is tightening monetary policy and hiking interest rates. What will be essential to watch in the future is the Fed’s rate hike speed. If they become excessively aggressive, demand may plummet or suffocate, resulting in a recession. For the time being, however, commodities are a fantastic inflation hedge as long as demand exceeds supply.
That being said, let’s have a brief but detailed look at three commodities stocks that analysts consider to be smart portfolio picks:
Teck Resources Ltd (TECK)
Teck Resources Ltd. (TECK) is a mineral resource business that mines and develops related resources. Copper, zinc, steelmaking coal, and energy have emphasized its business units. Lead, silver, and a variety of specialty and other metals, chemicals, and fertilizers are also available from TECK. It concentrates on its project activities in Canada, Peru, Chile, and the US. TECK was established on September 24th, 1951, in Vancouver, British Columbia, Canada.
For TECK’s last two earnings reports, it handily beat Wall Street experts’ projections on both EPS (Earnings-per-share) and revenue. Most recently, it exceeded EPS and revenue expectations by 6.45% and 28.08%, respectively. TECK displays healthy year-over-year growth, with revenue growth of 72.11% and EPS growth of 414.94%. TECK shows $4 billion in sales for its current quarter, at $2.32 per share. TECK currently has a dividend yield of 0.99%, with a quarterly payout of 10 cents per share. TECK has a median price target of 43.95, with a high of 56.04 and a low of 31.66 among the analysts issuing 12-month price estimates. The median forecast implies an increase of 10.96% over current pricing, and the consensus among analysts gives TECK a sturdy buy rating.
Mosaic Co (MOS)
The Mosaic Company (MOS) manufactures and sells concentrated phosphate and potash agricultural fertilizers. The company’s operations are managed via majority-owned subsidiaries. Phosphates, Potash, and Mosaic Fertilizantes, are the three segments that makeup MOS. The Phosphates sector owns and operates mining and manufacturing facilities in North America. The Potash segment owns and operates potash mines and manufacturing facilities that generate potash-based agricultural fertilizers, animal feed additives, and industrial goods. In case you didn’t know – potash is a variety of mined and manufactured salts that contain potassium in a water-soluble form. In Brazil, the Mosaic Fertilizantes business produces and sells phosphate and potassium-based agricultural fertilizers as well as animal feed components. Plymouth, Minnesota, is the corporation’s headquarters, which was founded on October 22nd, 2004.
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MOS had a bumpy ride throughout its fiscal 2021, with mixed results from its quarterly earnings reports. Its year-over-year numbers do have a silver lining, with revenue growth of 53.6%. MOS’s current quarter shows a solid $4.2 billion in sales, at an EPS of $2.42 per share. MOS currently has a dividend yield of 0.63%, with an 11 cents per share quarterly shareholder payout. The consensus price target for MOS from the analysts that provide 12-month predictions is 68.45, with a high of 86.00 and a low of 42.00. The median estimate is down 4.17% from its most recent price. Still, MOS gets a buy rating from the experts that shouldn’t be dismissed.
Alpha Metallurgical Resources Inc (AMR)
Alpha Metallurgical Resources, Inc. (AMR) is a mineral exploration and development business. AMR is in the business of providing met and thermal coal. Met and CAPP-Thermalare the primary business segments in which AMR works. Deep Mine 41, Road Fork 52, Black Eagle, and Lynn Branch are among the met (metallurgical) coal mines in the Met section. Underground thermal coal mines make up the CAPP-Thermal section. AMR was established on June 26th, 2016, based in Bristol, Tennessee.
The only downside with AMR is that they don’t currently pay a dividend, as the other two I mentioned. That shouldn’t be a detractor, though, since their financial fundamentals are strong. AMR has beaten analysts ‘ projections for the last four consecutive fiscal quarters. Most recently, AMR boasted an EPS beat by 17.62% and revenue by 14.12%. AMR’s year-over-year numbers provide an impressive showing, with revenue growth of 155.74% and EPS growth of 345.39%. AMR’s current quarter shows $945 million in sales, with a whopping EPS of $19.04 per share. The consensus price target for AMR from the analysts that provide 12-month price projections is 155.00. The median forecast is up 21.00% from the most recent price, and AMR has earned a robust buy rating that should be on our investor radar.
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