Most traders and investors tend to gravitate towards mega-cap, technology, and growth stocks thanks to the big upside moves that they are known to make. While those types of stocks are certainly intriguing, you are doing your account a major disservice by neglecting other areas of the market that might not initially seem as exciting. For example, metals and mining stocks have been posting strong gains in 2021 and are more than deserving of your attention at this time.
With a variety of commodities seeing their prices rallying higher and plenty of analysts anticipating big moves ahead for precious metals like gold, it makes a lot of sense to consider adding standout names in metals and mining to your investing plans. This is especially true if you believe that rising inflation is going to play a factor in the economy going forward. Let's take a look at the top 3 metals and mining stocks to buy now.
1. Rio Tinto
Are you familiar with the commodity iron ore its principal uses? It’s a raw material consisting of rocks and minerals that contain iron and it is primarily used to make steel. As you can imagine, Iron ore is a very important input for manufacturing and construction all over the world, which is one of the reasons why Rio Tinto (NYSE:RIO) is such a great metals and mining stock to consider buying. This is one of the world’s largest mining companies and produces iron ore, aluminum, copper, diamonds, gold, industrial minerals, and uranium.
Rio Tinto generates the majority of its earnings from iron ore production (76% of EBITDA in 2020), which is good news as steel demand is expected to grow by 5.8% in 2021 as the world rebounds from the impacts of the pandemic and infrastructure spending increases. This is particularly true in China, where construction activity is really picking back up. Rio Tinto is also benefitting from strong copper prices and has one of the better balance sheets in the sector, making it a top pick in metals and mining. The stock is up over 13% year-to-date and offers investors a 5.37% dividend yield as of this writing.
2. Steel Dynamics
Next, we have Steel Dynamics (NASDAQ:STLD), a midcap steel company that is worth adding at this time for several compelling reasons. We know that heavy demand for steel is driving up its prices and that the automotive and original equipment manufacturer industries are poised to rebound from the pandemic, which directly benefits this company. It’s one of the largest steel producers and one of the largest metal recyclers in the United States with an annual steelmaking and coating capacity of 13 million tons. Steel Dynamics also has a new flat roll steel mill in Sinton, Texas that should be fully operational in mid-2021. This could be a nice growth driver for the company moving forward since the mill will be capable of producing 3 million tons of steel annually.
The company operates in the electric furnace mini-mill sector of the industry, which is attractive because they are more cost-effective and efficient than the blast furnaces that many competitors use. Steel Dynamics stock is breaking out to new all-time highs after a few weeks of consolidation following the company’s Q1 earnings report, which presents an attractive buying point for investors. The company offers investors a 2% dividend yield and has one of the best balance sheets in the sector, making it a top pick in metals and mining at this time.
3. Sibanye Stillwater
While adding portfolio exposure to gold is probably a good idea at this time, gaining exposure to platinum group metals might be ever smarter. Sibanye Stillwater (JO:SSWJ) is a company that gives investors access to both, which makes it a fantastic option in metals and mining at this time. It’s an independent global precious metal mining company with a diverse portfolio of operations in the United States, South Africa, Zimbabwe, and Finland. As the world’s largest primary producer of platinum and the second largest primary producer of palladium, Sibanye Stillwater offers exposure to some of the best performing precious metals in the market at this time.
Palladium and platinum are used by automakers in catalytic converter manufacturing and in jewelry, dentistry, and electronics. These lustrous white precious metals are even rarer than gold and are typically viewed as a good hedge against inflation, which is another solid reason to consider buying Sibanye Stillwater at this time. The company also has a gold mining operation and a 30% stake in a lithium hydroxide project in Finland, which is a material that is very important in the EV sector.