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2 Basic Materials Stocks to Buy for Protection in 2023
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There is increasing optimism in regards to the broader stock market and economy as investors appear to be shrugging off inflation concerns in hopes of a less hawkish fed.
The broader technology sector for example is starting to carve out nice year-to-date gains following a very tremulous 2022 with the Nasdaq now up +15% YTD.
Still, investors may not want to be too overly optimistic and keep in mind some of the stocks out of the basic materials sector that have provided a hedge against inflation over the last year. Here are two top-rated basic materials stocks investors should consider buying right now.
Still worthy of consideration is fresh shell egg producer Cal-Maine Foods which currently sports a Zacks Rank #1 (Strong Buy). Cal-Maine Foods Agriculture-Products Industry is also in the top 19% of over 250 Zacks Industries.
Furthermore, CALM stock also lands an overall “A” VGM Style Scores grade. The price of eggs has risen to historical levels in the last few months and Cal-Maine Foods should be able to capitalize as the largest producer of fresh shell eggs in the United States.
To that note, earnings estimate revisions have continued to soar for Cal-Maine Foods over the last quarter. Fiscal 2023 earnings estimates have skyrocketed 107% to $16.75 per share compared to estimates of $8.10 a share 90 days ago. Even better, Fiscal 2024 earnings estimates have climbed 74%.
Image Source: Zacks Investment Research
Plus, Call-Maine Foods stock is now up +33% over the last year to largely outperform the S&P 500’s -9% and the Agriculture-Products Markets -10%. More Impressive, over the last three years, CALM’s +50% also tops the benchmark and roughly matches its Zacks Subindustry’s stellar performance.
Another basic materials stock that may be beneficial in investors’ portfolios is Commercial Metals. There is an abundance of Steel-Producers stocks to choose from with the industry currently in the top 16% of all Zacks Industries but CMC sticks out sporting a Zacks Rank #1 (Strong Buy).
Plus, Commercial Metals may be more intriguing to some investors for its attractive stock price compared to other industry titans like Nucor (NUE - Free Report) ) and Steel Dynamics (STLD - Free Report) ) which trade over $100 a share. Commercial Metal’s valuation seems to support this as well with CMC trading at $56 a share and just 7.6X forward earnings.
This is below Nucor’s 13.1X and Steel Dynamics’ 10.9X forward earnings and nicely beneath the industry average of 9X. Plus, CMC stock trades 70% below its decade high of 25.3X and at a 34% discount to the median of 11.6X with earnings estimate revisions trending higher.
Image Source: Zacks Investment Research
Commercial Metal’s fiscal 2024 earnings estimates in particular are very intriguing. With China, the world’s largest steel consumer recently reopening its economy this is expected to broadly move the commodity price higher.
In correlation, while Commercial Metals’ overall bottom-line growth is expected to cool down following several exceptional years, FY23 earnings estimates have slightly gone up and FY24 estimates have leaped 45% to $5.59 per share over the last quarter.
Image Source: Zacks Investment Research
Over the last year, CMC stock is up +53% to crush the S&P 500 and easily top the Steel-Producers Markets +14%. Also, while this trailed Steel Dynamics’ +95% it has beat Nucor’s +39%.
In the last three years, CMC’s +172% has trailed NUE and STLD but has impressively outperformed the benchmark and its Zacks Subindustry’s +100%.
Image Source: Zacks Investment Research
Takeaway
With egg and steel prices remaining above historical levels, Cal-Maine Foods and Commercial Metals look poised to continue benefiting from higher commodity prices. Both stocks are still attractive at their current levels and have given investors the opportunity to profit from higher inflation, providing a defensive hedge against the fed’s quantitative tightening cycle.
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2 Basic Materials Stocks to Buy for Protection in 2023
There is increasing optimism in regards to the broader stock market and economy as investors appear to be shrugging off inflation concerns in hopes of a less hawkish fed.
The broader technology sector for example is starting to carve out nice year-to-date gains following a very tremulous 2022 with the Nasdaq now up +15% YTD.
Still, investors may not want to be too overly optimistic and keep in mind some of the stocks out of the basic materials sector that have provided a hedge against inflation over the last year. Here are two top-rated basic materials stocks investors should consider buying right now.
CalMaine Foods (CALM - Free Report) )
Still worthy of consideration is fresh shell egg producer Cal-Maine Foods which currently sports a Zacks Rank #1 (Strong Buy). Cal-Maine Foods Agriculture-Products Industry is also in the top 19% of over 250 Zacks Industries.
Furthermore, CALM stock also lands an overall “A” VGM Style Scores grade. The price of eggs has risen to historical levels in the last few months and Cal-Maine Foods should be able to capitalize as the largest producer of fresh shell eggs in the United States.
To that note, earnings estimate revisions have continued to soar for Cal-Maine Foods over the last quarter. Fiscal 2023 earnings estimates have skyrocketed 107% to $16.75 per share compared to estimates of $8.10 a share 90 days ago. Even better, Fiscal 2024 earnings estimates have climbed 74%.
Image Source: Zacks Investment Research
Plus, Call-Maine Foods stock is now up +33% over the last year to largely outperform the S&P 500’s -9% and the Agriculture-Products Markets -10%. More Impressive, over the last three years, CALM’s +50% also tops the benchmark and roughly matches its Zacks Subindustry’s stellar performance.
Image Source: Zacks Investment Research
Commercial Metals (CMC - Free Report) )
Another basic materials stock that may be beneficial in investors’ portfolios is Commercial Metals. There is an abundance of Steel-Producers stocks to choose from with the industry currently in the top 16% of all Zacks Industries but CMC sticks out sporting a Zacks Rank #1 (Strong Buy).
Plus, Commercial Metals may be more intriguing to some investors for its attractive stock price compared to other industry titans like Nucor (NUE - Free Report) ) and Steel Dynamics (STLD - Free Report) ) which trade over $100 a share. Commercial Metal’s valuation seems to support this as well with CMC trading at $56 a share and just 7.6X forward earnings.
This is below Nucor’s 13.1X and Steel Dynamics’ 10.9X forward earnings and nicely beneath the industry average of 9X. Plus, CMC stock trades 70% below its decade high of 25.3X and at a 34% discount to the median of 11.6X with earnings estimate revisions trending higher.
Image Source: Zacks Investment Research
Commercial Metal’s fiscal 2024 earnings estimates in particular are very intriguing. With China, the world’s largest steel consumer recently reopening its economy this is expected to broadly move the commodity price higher.
In correlation, while Commercial Metals’ overall bottom-line growth is expected to cool down following several exceptional years, FY23 earnings estimates have slightly gone up and FY24 estimates have leaped 45% to $5.59 per share over the last quarter.
Image Source: Zacks Investment Research
Over the last year, CMC stock is up +53% to crush the S&P 500 and easily top the Steel-Producers Markets +14%. Also, while this trailed Steel Dynamics’ +95% it has beat Nucor’s +39%.
In the last three years, CMC’s +172% has trailed NUE and STLD but has impressively outperformed the benchmark and its Zacks Subindustry’s +100%.
Image Source: Zacks Investment Research
Takeaway
With egg and steel prices remaining above historical levels, Cal-Maine Foods and Commercial Metals look poised to continue benefiting from higher commodity prices. Both stocks are still attractive at their current levels and have given investors the opportunity to profit from higher inflation, providing a defensive hedge against the fed’s quantitative tightening cycle.