Optimism about the global economic outlook has spurred the prices of a wide variety of commodities – including ,, ,,, and even ,, and – to new highs in recent weeks, prompting discussion of a new commodity super cycle. fueled. ]
Indeed, the Invesco DB Commodity Index Tracking Fund (NYSE :), one of the most important ETFs in the industry, is up about 16% since November 2018 to hit its best level since November 2018. It for its part, has risen only 4% over the same period.
Underpinned by a slew of stimulus measures, successful introduction of COVID-19 vaccines, and a resurgence in demand from China with the highest consumer protections, it appears that commodity prices will continue to grow in the weeks and months ahead. This means that shares of companies that help provide these commodities can also rise significantly.
Below we highlight three stock names that are likely to have the best growth potential in the coming months. Each is worth considering given the resurgence in global commodity prices.
1. Southern (NYSE 🙂 Copper
Southern Copper (NYSE 🙂 is one of the world's largest publicly traded copper miners. The company, which operates mines and smelters mainly in Mexico, Peru and Chile, is also one of the world's largest producers of silver.
The stock of SCCO has more than doubled in value in the past 12 months, up 110% as rising base metal prices supported investor sentiment about the commodity producer.
Shares, which rose to a new record high of $ 83.15 Monday, closed at $ 79.27 last night, giving the Mexico City-based miner a market cap of about $ 61.3 billion.
As one of the world's leading copper producers, it has soared the prices of the red metal, which recently rose above the $ 4 level for the first time in nearly a decade.
Investor sentiment was further lifted in the last week of January, when Southern Copper announced that it easily exceeded consensus estimates, largely due to higher sales volumes and rising prices for copper, silver and zinc.
Earnings per share were up 90% over the same period last year to $ 0.76, far ahead of expectations for earnings per share of $ 0.70. Sales, meanwhile, were up 27% year-on-year to $ 2.35 billion, easily exceeding estimates for sales of $ 2.1 billion.
Southern Copper mined 259,744 tons of copper during the reported quarter, 1.3% more than the same period a year earlier.
To add to those encouraging numbers, Southern Copper's board of directors approved a quarterly dividend of $ 0.60 a share, an increase of 20% over the October quarterly dividend of $ 0.50 and tripling the April quarterly dividend of $ 0.20.
2. EOG Resources
EOG Resources (NYSE 🙂 is one of the largest independent oil companies and companies in the United States. Its core activities include the research, development, production and marketing of crude oil, natural gas and natural gas liquids.
Shares of the Houston, Texas-based energy major have taken off strongly this year, up 33% so far in 2021, reaping the benefits of higher oil prices.
EOG stock climbed to a one-year high of $ 68.16 yesterday, before finishing at $ 67.85. At its current level, it has a market cap of $ 39.6 billion, making it the fourth largest US oil producer, after ExxonMobil (NYSE :), Chevron (NYSE 🙂 and ConocoPhillips (NYSE :).
The low-cost oil producer is expected to continue to benefit from the improvement in crude oil market fundamentals in the coming months as West Texas Intermediate, the US oil benchmark, exceeds $ 60 a barrel for the first time in more than a year came out.
EOG has previously said that it only needs an average of $ 36 per barrel of oil this year to maintain its current production rate and 2.6% dividend.
With oil prices well above that level, EOG is poised to produce significant free cash flow, giving them the means to pay off debt, buy back shares and even increase their dividends.
The EOG is expected to report fourth-quarter earnings on Thursday, February 25, after US markets close. Consensus estimates call for earnings of $ 0.36 per share on revenue of $ 2.89 billion.
Top and bottom line figures aside, investors will keep an eye on EOG's update regarding its production targets for its drilling sites in the Permian, Bakken, DJ Basin and Powder River Basin regions. During the EOG, EOG produced an average of 377,600 barrels per day from shale formations in the lower 48 states.
3. Deere & Company
Deere & Company (NYSE 🙂 is one of the world's leading manufacturers of agricultural, construction and mining equipment. As such, the sustained rise in grain and metal prices should hold great promise to the company in the coming months, which will result in increased demand for crops and material handling equipment.
The Moline, Illinois-based tractor manufacturer has seen its stock rise about 86% in the past 12 months, far outperforming both the and S&P 500's returns.
After hitting a new all-time high of $ 338.77 on Tuesday, DE shares ended at $ 337.41, yielding a market capitalization of approximately $ 106.1 billion.
Deere reported on February 19, destroying expectations for revenues and revenues as well as benefits from the ongoing recovery in both the agricultural and mining sectors.
The farm equipment and heavy machinery manufacturer reported earnings per share of $ 3.87 for the fiscal first quarter of 2021, a 137% improvement over earnings per share of $ 1.63 in the same quarter a year earlier.
Revenues increased 23% year-over-year to $ 8.05 billion, which was much higher than the estimated $ 7.21 billion, due to increased equipment sales volumes.
The company's equipment sales were up $ 1.5 billion when comparing the first quarters of 2020 and 2021.
The positive results prompt Deere to increase its profit forecast for 2021, citing improved equipment sales outlook in a recovering global economy. The company now expects total net income of approximately $ 4.8 billion, up from its end-November forecast of $ 3.8 billion.
