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 brightest opportunities in the space – nine stocks that the pros believe are among best materials stocks you can buy 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.