Commodity markets have been under immense pressure since Russia’s invasion of Ukraine due to a slew of economic sanctions imposed on one of the world’s largest commodity exporters and worsening supply chain disruptions. Russia is the second-largest exporter of crude oil and the leading exporter of several crops, coal, gold, and steel-based products. The import embargoes on Russia have significantly impacted the supply of such commodities to the global economy, causing commodity prices to surge over the past month. Furthermore, due to the destruction of infrastructure and the displacement of civilians, commodity exports from Ukraine have halted since the Russian invasion, worsening the commodity shortage.
Due to a resurgence of COVID-19 cases, commodity prices are expected to rally further in the near term with lockdowns in China. In addition, a global oil shock could aggravate the already volatile commodity markets, as several European nations explore a potential ban on Russian oil in the wake of increased war crimes allegedly committed by the country.
Because commodity prices are expected to climb more in the near term, we think investing in top-rated commodity stocks SunCoke Energy, Inc. (SXC), Yamana Gold Inc. (AUY), LyondellBasell Industries N.V. (LYB), Intrepid Potash, Inc. (IPI), and United States Steel Corporation (X) could reap substantial returns.
SunCoke Energy, Inc. (SXC)
SXC in Lisle, Ill., produces metallurgical and thermal coal through three segments: Domestic Coke; Brazil Coke; and Logistics. Its logistics business provides services to steel, coke (including coke-making facilities), electric utility, and coal production.
On Feb. 1, SXC declared a cash dividend of $0.08 per share on its common stock, which was paid on March 1, 2022.
SXC’s revenues increased 17.8% year-over-year to $365.30 million in its fourth quarter (ended December 31). Its adjusted EBITDA grew 70% from its year-ago value to $62.90 million, while its net profit improved 354% year-over-year to $12.70 million. The company’s EPS increased 350% from the year-ago value to $0.15.
Analysts expect SXC’s revenue for its fiscal second quarter (ending June 30, 2022) to be $370.40 million, representing 1.7% year-over-year growth. The Street expects the company’s EPS to increase 272.7% year-over-year to $0.19 in the next quarter.
The stock has gained 42.8% in price over the past year to close yesterday’s trading session at $9.15.
SXC’s POWR Ratings reflect this promising outlook. The company has an overall B rating, which translates to Buy in our proprietary rating system. The POWR Ratings assess stocks by 118 distinct factors, each with its own weighting.
SXC has an A grade for Momentum and a B grade for Value and Quality. Within the A-rated Coal industry, it is ranked #3 of 11 stocks.
To see additional POWR Ratings for Growth, Stability, and Sentiment for SXC, click here.
Yamana Gold Inc. (AUY)
AUY in Toronto, Canada, is a producer of precious metals. It is engaged in gold and silver production, exploration properties, and land positions across the Americas. It owns various properties: Canadian Malartic, Jacobina, Cerro Moro, El Penon, Minera Florida, Wasamac Property, and Camflo Property.
On February 8, the company reported five-year results that have exceeded expectations. Furthermore, the company has effectively replaced depletion and increased mineral reserves, mineral resources, and its pipeline of exploration targets. Analysts expect AUY to continue to expand its production and thereby boost its free cash flows.
In the fourth quarter, ended Dec. 31, 2021, AUY’s revenues increased 9.1% year-over-year to $503.80 million, while its net earnings increased 6.5% from its year-ago value to $109.70 million.
Analysts expect AUY’s EPS and revenue to increase 1.3% and 13.7%, respectively, year-over-year to $0.06 and $479.95 million in its the fiscal first quarter (ended March 31, 2022).
AUY stock has gained 41.5% in price over the past three months.
AUY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. AUY also has a B grade for Quality and Sentiment. The stock is ranked #9 of 36 stocks in the Miners - Gold industry.
Click here to see the other ratings of AUY for Growth, Value, Momentum, and Stability.
Click here to check out our Gold and Silver Industry Report for 2022
LyondellBasell Industries N.V. (LYB)
LYB is a chemical company that conducts its operations through six segments: Olefins and Polyolefins-Americas; Olefins and Polyolefins-Europe, Asia, International (O&P-EAI); Intermediates and Derivatives (I&D); Advanced Polymer Solutions; Refining; and Technology. It produces and markets olefins and co-products, polyolefins, polyethylene products, propylene oxide and its derivatives, oxyfuels, and various compounds and solutions. LYB is headquartered in Houston, Tex.
On April 12, LYB announced its goal to reduce greenhouse gas emissions, boost recycling of plastics and use renewable-based feedstock in its “Future Focused” sustainability report. The company is focused on achieving its circular and sustainable plastics and decarbonization goals in the coming years.
On February 2, LYB was named in Fortune Magazine’s World’s Most Admired Companies list for the fifth consecutive year. This recognition reflects LYB’s consistently strong performance within the industry.
In its fiscal year 2021 (ended Dec. 31, 2021), LYB’s sales and other operating revenues increased 66.4% year-over-year to $46.17 billion. Its net income increased 293.6% from its year-ago value to $5.62 billion, while its EBITDA grew 164.5% year-over-year to $8.69 billion. The company’s EPS came in at $16.75, representing a 295% year-over-year improvement.
For its fiscal first quarter (ended March 31, 2022), LYB’s EPS and revenue are expected to increase 10.6% and 38.6%, respectively, year-over-year to $3.54 and $12.59 billion.
The stock has gained 12.3% in price year-to-date, closing yesterday’s trading session at $103.53.
The company has an overall B rating, which translates to Buy in our proprietary rating system. LYB has an A grade for Value. The stock is ranked #36 of 89 in the A-rated Chemicals industry.
Click here to see the other ratings of LYB for Quality, Sentiment, Momentum, Stability, and Growth.
Intrepid Potash, Inc. (IPI)
IPI in Denver, Colo., extracts and produces potash in the United States. It also offers salt, magnesium chloride, metal recovery salts, brines, and water which are derived as part of the mining process. The company operates through three segments: Potash; Trio; and Oilfield Solutions.
During its fourth quarter, which ended Dec. 31, 2021, IPI’s net sales increased 48.3% year-over-year to $71.83 million. Its gross margin rose 275.8% from its year-ago value to $21.85 million. The company’s adjusted net income increased 1,632.3% year-over-year to $7.97 million, while its adjusted net income per share grew 1,600% from the prior-year quarter to $0.60.
Analysts expect IPI’s revenues to increase 53% year-over-year to $90.88 million in its fiscal first quarter (ended March 31, 2022). Its EPS is expected to increase by 1,138.3% to $2.23 in the to-be-reported quarter.
Over the past year, the stock has gained 252.6% in price to close the last trading session at $108.20.
According to the POWR Ratings, IPI has an A grade for Growth and a B grade for Quality. The stock is ranked #12 of 32 in the Agriculture industry.
To see the other ratings of IPI for Value, Momentum, Stability, and Sentiment, click here.
United States Steel Corporation (X)
Pittsburgh, Pa.-based X is a leading steel producer operating through four segments: North American Flat-Rolled; Mini Mill; U.S. Steel Europe (USSE); and Tubular Products (Tubular). It also engages in the real estate business and serves customers in automotive, construction, consumer, electrical, industrial equipment, distribution, and energy markets.
On February 3, X allied with EQT Corporation, Equinor, GE Gas Power, Marathon Petroleum, Mitsubishi Power, and Shell Polymers to launch a low-carbon and hydrogen industrial hub in Ohio, Pennsylvania, and West Virginia. This initiative could reduce carbon dioxide emissions significantly.
On January 26, the company partnered with Carnegie Foundry, a leading robotics and AI studio, to accelerate advanced robotics and autonomy capabilities. With this investment, the company should continue to serve profitable solutions and meet the need for a robust and resilient supply chain.
X’s net sales increased 119.4% year-over-year to $5.62 billion in the fourth quarter, ended Dec. 31, 2021. Its net earnings increased 2,081.6% from its year-ago value to $1.07 billion, while its EBIT grew 2,355.6% year-over-year to $1.02 billion. X’s EPS rose 1,604.5% from the prior-year quarter to $3.75.
The $2.95 consensus EPS estimate for the fiscal first quarter (ended March 2022) represents a 173.3% improvement year-over-year. The $5.27 billion consensus revenue estimate for the about-to-be-reported quarter represents a 43.8% increase from the same period last year.
Shares of X have risen 70.7% in price over the past year.
X has an overall B rating, which translates to Buy in our proprietary rating system. It is no surprise that X has an A grade for Growth, Value, and Momentum and a B grade for Quality. Also, it is ranked #14 of 34 stocks in the A-rated Steel industry.
In addition to the POWR Ratings grades I have just highlighted, one can see the X ratings for Stability and Sentiment here.
SXC shares were trading at $9.38 per share on Wednesday afternoon, up $0.23 (+2.51%). Year-to-date, SXC has gained 43.46%, versus a -6.76% rise in the benchmark S&P 500 index during the same period.
About the Author: Shweta Kumari
Shweta's profound interest in financial research and quantitative analysis led her to pursue a career as an investment analyst. She uses her knowledge to help retail investors make educated investment decisions.
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