With silver, copper and gold prices all hitting new highs in recent months, the commodity supercycle seems to be in full effect. Amid rising demand from electric vehicles (EVs), the military, and artificial intelligence (AI) sources, more and more analysts are weighing in with bullish forecasts for industrial metals like silver (SIN24) and copper (HGN24), while gold (GCM24) is expected to draw investors as an inflation hedge.
Against this backdrop, Manish Kabra, SocGen's head of U.S. equity and multi-asset strategy, warns that while underlying commodity prices could pull back, there's still upside potential in related mining stocks. To that end, Kabra has created a basket of commodity stocks that look set to benefit from “greenflation” as the clean energy transition rolls on.
Kabra explained, “Our greenflation basket consists of stocks that are primed to gain from surging demand or reduced supply of 24 critical metals needed in climate technology and from stepped-up investment by mining companies."
Here's a closer look at five of those “greenflation” stocks for investors seeking diverse commodity exposure.
Commodity Stock #1: Alcoa
Founded in 1888 by Captain Alfred Hunt, who is considered to be the father of the American aluminum industry, Alcoa Corp (AA) is a major producer of aluminum products. Its focus is on midstream aluminum products like sheets, plates and extrusions.
Alcoa has ownership or equity interests in seven active bauxite mines (the raw material for aluminum production) located across Australia, Brazil, Guinea, and Saudi Arabia. Its market cap currently stands at $7.95 billion.
AA stock is up 30.7% on a YTD basis, and it offers a dividend yield of 0.9%.
Overall, analysts have deemed Alcoa stock a “Hold,” with a mean target price that has already been surpassed. The high target price of $48, however, indicates an upside potential of about 8.4% from current levels.
Out of 10 analysts covering the stock, 3 have a “Strong Buy” rating, 5 have a “Hold” rating, and 2 have a “Strong Sell” rating.
Commodity Stock #2: Lithium Americas
Lithium Americas (LAC) is a pure-play lithium company, meaning their primary focus is on lithium mining and development. Founded in 2010, their key project is the Thacker Pass Lithium Project. Located in Nevada, Thacker Pass is one of the largest known lithium resources in the world, and is expected to be among the lowest-cost producers globally.
LAC's market cap is a modest $736 million, and the stock is down 46.9% on a YTD basis.
Overall, analysts have an average rating of “Moderate Buy” for LAC stock, with a mean target price of $8.29, which denotes an upside potential of roughly 146.7% from current levels.
Out of 11 analysts covering the stock, 6 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, and 3 have a “Hold” rating.
Commodity Stock #3: NexGen Energy
NexGen (NXE) is a uranium exploration and development company. Their primary focus is on a single project - The Arrow Resource Project - located in Saskatchewan, Canada. Arrow is considered one of the largest undeveloped uranium deposits in the world, and the company is aiming to develop it into a high-grade uranium mine. NexGen's market cap is currently at about $4.2 billion.
NexGen shares are up 9.1% on a YTD basis, and NXE has rocketed 72% over the past 52 weeks.
Analysts have a consensus rating of “Strong Buy” for NXE stock, with a mean target price of $10.13. This suggests an expected upside potential of about 32.6% from current levels.
Out of 10 analysts covering NexGen stock, 6 have a “Strong Buy” rating and 4 have a “Moderate Buy” rating.
Commodity Stock #4: Wheaton Precious Metals
Founded in 2004 as Silver Wheaton before rebranding in 2017, Wheaton Precious Metals (WPM) is a leading precious metals streaming company. They don't own or operate mines, but instead provide upfront financing to mining companies in exchange for the right to buy a portion of their future metals production at pre-determined prices, typically below market rates. This allows them to benefit from rising metal prices without the risks and costs of mine ownership. WPM's market cap currently stands at about $25 billion.
WPM stock is up 12.3% on a YTD basis, and offers a dividend yield of 1.13%.
Analysts have an average rating of “Strong Buy” for the stock with a mean target price of $60.12. This denotes an expected upside potential of roughly 9.2% from current levels.
Out of 13 analysts covering WPM stock, 10 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, and 2 have a “Hold” rating.
Commodity Stock #5: Ivanhoe Mines Ltd
Founded in 2012, Toronto-based Ivanhoe Mines Ltd (IVPAF) is a mining exploration and development company focused on metals like copper, gold, platinum (PLN24), palladium (PAM24), and silver, among others. Their key projects include the Platreef Project (South Africa), the Kamoa-Kakula Project, the Western Foreland Exploration Project, and the Kipushi Project in Congo.
Listed in the OTC markets here in the U.S., IVPAF stock is up 49% on a YTD basis.
The Toronto listing is a favorite of analysts, with Ivanhoe stock racking up 6 “Strong Buy” ratings and 3 “Moderate Buys.”
On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
