7 Best Copper and Steel Stocks to Buy Now

The U.S. infrastructure bill and ongoing global economic recovery bode well for producers.

Copper and steel are needed for any economic expansion and infrastructure push. On Wall Street, the red metal even has the nickname “Dr. Copper,” as if it had an advanced economics degree, given the correlation between its price moves and the direction of the economy. That’s because copper is used in a wide variety of goods such as wiring and piping for homes and businesses, electronics and cars. It’s also crucial to the energy transition, as it is a key ingredient in wind and solar farms. Steel has a similar story, making up the skeletons of new buildings, bridges and automobiles. “It is certain that copper and steel will be in high demand for the indefinite future,” says Julia Spina, quantitative finance researcher with Tastytrade. Here’s a look at seven of the best copper and steel stocks to buy today.

Freeport-McMoRan Inc. (ticker: FCX)

Copper prices have come down recently, which means copper miners don’t get as much for their product. But Shaun Murison, senior market analyst with IG, says that dip is only a short-term phenomenon as some market participants thought near-term prices were getting too elevated. The prospect that rising interest rates could crimp demand for goods that use copper, in addition to the COVID-19 lockdown in China, a major consumer, have also been short-term factors. “Copper does however remain not far from its all-time highs and prices still remain ‘accretive’ for miners,” Murison says, meaning a boost to earnings. With that in mind, he points to Freeport-McMoRan. It’s one of the largest copper miners in the world and is also a major producer of molybdenum, which is used to alloy steel. Murison says the miner’s share price suggests it is trading at a 20% discount to its fair value over the next 12 months or so.

Glencore Plc (GLNCY)

The next top way to invest in cooper and steel is Glencore. Although Glencore produces other metals, the mining and trading company is “another way to get exposure to copper, which is a core pillar of revenue and earnings for the group,” Murison says. The company also produces the type of coal used in steelmaking, known as metallurgical or coking coal, and markets steelmaking ingredient iron ore sourced from third parties. Despite a short-term “retracement,” Murison says the long-term trend for the company’s shares is up. A consensus of analyst estimates suggests a long-term price target could be roughly 16% higher than the current price, he says. On April 28, the company lowered its copper production guidance for the current year to 1.11 million metric tons from 1.15 million metric tons. But its marketing department has been doing well amid commodities volatility.

BHP Group Ltd. (BHP)

The largest miner in the world by stock market value, BHP is a major copper producer and also sells metallurgical coal. But it’s iron ore that brings the company the most revenue of any single commodity it produces. China — the world’s biggest steelmaker and importer of iron ore — has a heavy influence on iron ore prices. Opposing forces such as the lockdown there and steel production limits versus economic stimulus measures in the Asian nation might make for volatility in iron ore prices and BHP’s stock. “BHP Group remains a company with a long track record of sound management and a strong balance sheet,” Murison says. “Short-term weakness in the stock could be seen as an opportunity for accumulation for investors with a longer-term investment horizon.”

Teck Resources Ltd. (TECK)

During times of inflation, commodity producers can do well as the environment of rising prices boosts what they can earn for their products — as long as rising interest rates don’t dampen demand. Bryan Cannon, CEO at Cannon Advisors, says that the inflationary environment bodes well for this copper and metallurgical coal producer, which he says should have a place in long-term stock portfolios. “Things can change quickly in a volatile market like we are experiencing, but as of now, Teck is trending upwards and now would be a great time to pick this stock up,” Cannon says.

Southern Copper Corp. (SCCO)

One thing to keep in mind is that commodities prices have been boosted by global supply chain disruptions and the Russia-Ukraine war. But as those issues get worked out, many commodities markets might pull back, says Tastytrade’s Spina. “Steel assets may be especially vulnerable,” she says. “Therefore, it may be better to focus on copper companies that have performed relatively well since the onset of the pandemic.” In addition to FCX, Spina points to Southern Copper. In 2021, the company’s net sales and net income hit record highs. A 51.1% higher market price for copper boosted sales in dollar figures even as sales volume fell by 11% for the year, and cost controls helped net income more than double despite operating cost increases. When it comes to the top copper stocks to buy now, Southern Copper has to be in contention.

Steel Dynamics Inc. (STLD)

Another stock Cannon says should be in long-term portfolios is Steel Dynamics, which makes steel products primarily with recycled scrap. The top steel stock “has experienced tremendous growth over the years,” Cannon says. “Among many things leading to their great success over the years is the fact that they not only provide the raw materials needed to produce high-quality steel, but they also have the ability to fabricate a wide variety of high-quality finished steel products.” In addition to steel operations that produce rolls of steel sheet, the company’s fabrication operations produce structural steel for buildings, and its metals recycling operations collect and process scrap. “Depending on your timeline, we feel STLD is a bit overbought at the present and would suggest waiting to buy the dip,” Canon says. “Long term, however, the stock is very appealing.”

Nucor Corp. (NUE)

Robert Ross, a professional stock analyst and financial influencer who runs the @tik.stocks account on TikTok, boasting more than 360,000 followers, points to Nucor, another steel manufacturing company that uses scrap as its primary raw material. “Steel is a key component to the development and maintenance of U.S. infrastructure,” he says. “Since President Biden has pledged to use U.S. steel … in the infrastructure package and NUE is the largest steel supplier in the U.S., the company has the scale and connections to capitalize,” Ross says. This month, the company said it expects the second quarter of this year to be the most profitable in its history as its steel products segment continues to benefit from nonresidential construction activity. It also expects its steel mills and raw materials segments to do well.

7 best copper and steel stocks to buy in 2022:

— Freeport-McMoRan Inc. (FCX)

— Glencore Plc (GLNCY)

— BHP Group Ltd. (BHP)

— Teck Resources Ltd. (TECK)

— Southern Copper Corp. (SCCO)

— Steel Dynamics Inc. (STLD)

— Nucor Corp. (NUE)

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7 Best Copper and Steel Stocks to Buy Now originally appeared on usnews.com

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