5 best commodity stocks to buy for Q3 2023

By:

James Knight

James is a lead editor for Invezz, where he covers topics from across the financial world, from the stock market, to cryptocurrency, to macroeconomic markets. His ... read more.

Updated: May 3, 2023

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The commodity market had a strong year in 2020. Some commodities, especially those that have industrial use, fell sharply in the first half of the year and rebounded sharply thereafter. After a strong 2020, we’ve assessed which commodity stocks still look like a good buy in 2023.

What are the top commodity stocks to buy?

Now that you have a basic understanding of how to buy and trade commodities shares, let’s examine the companies with the greatest potential ROI (return-on-investment). We have selected the best stocks that can help you get exposure to the commodities market. These are the best commodities stocks to buy in the current year because they are of companies with established portfolios and diverse projects and developments in their pipeline. In the next section, we’ll look at each of these companies in more depth.

1. U.S. Steel Corporation

United States Steel Corp.(X) reported strong fourth quarter 2020 net earnings of $49 million or $0.22 per share. The company recently declared a dividend of $0.01 per share of U. S. Steel Common Stock. With extensive iron ore production and an annual raw steelmaking capability of 26.2 million net tons, U. S. Steel produces high value-added steel products for the automotive, infrastructure, appliance, container, and energy industries.

2. Cleveland-Cliffs

Cleveland-Cliffs Inc (NYSE:CLF)’s stock price rose 7.7% since the company’s announcement that it anticipates revenue of $2.2 billion to $2.3 billion. With the backdrop of a resilient steel pricing environment and the growing number of steel companies competing for an increasingly scarce scrap supply in 2021 and beyond, Cleveland-Cliffs will continue to benefit from its differentiated business model.

3. Freeport-McMoRan

Freeport-McMoRan Inc engages in the mining of mineral properties in North America, South America, and Indonesia. The company primarily explores for copper, gold, molybdenum, silver, and other metals, as well as oil and gas. Its ample asset portfolio includes many projects. The business had revenue of $4.50 billion for the quarter, reporting $0.39 earnings per share for the quarter.

4. Alcoa

Alcoa beat analysts’ expectations in the recently announced Q4 and FY2020 results. Alcoa ended 2020 with cash on hand of $1.6 billion. In 2020, Alcoa exceeded its target to achieve $900 million in cash actions through strategic actions, improvements in working capital and productivity, and cash management in response to the economic uncertainty from the COVID-19 pandemic.

5. ExxonMobil

ExxonMobil has a robust business model that allows it to weather the effects of the pandemic. Its strategic initiatives and reorganizations enabled the company to respond decisively to permanently improve its cost structure, and emerge a stronger company. These improvements are expected to deliver structural expense savings of $6 billion per year by 2023, relative to 2019.

6. BP

Despite several incidents, BP’s market capitalization remains immense. As of January 2021 BP has a market cap of $75.3 Billion. This makes BP the world’s 197th most valuable company by market cap according to our data.

7. Emerson Electric

Emerson Electric has a diversified business with operations two primary segments — Automation Solutions and Commercial & Residential Solutions. Exiting first-quarter fiscal 2021, Emerson had cash and cash equivalents of $2,197 million, up from $1,635 million at the year-ago quarter. The company anticipates net sales growth of 4-8%. Underlying sales are expected to be flat to 4% up.

8. PPG Industries

PPG Industries Inc. Registered a profit of $272 million or $1.14 per share in fourth-quarter 2020. Net sales rose roughly 2% year over year to $3,757 million. The figure surpassed the Zacks Consensus Estimate of $3,561.6 million

9. Nucor

Nucor expects per-share earnings to jump 63% to US$3.87 as analysts also expect it to grow faster than the wider industry. Fourth-quarter net sales increased 3% year over year to $5.26 billion and sales grew 7% confirming a rebound in demand for Nucor’s core and largest segment, steel mills, which manufactures sheet, bars, and beams. Steel pricing also started to gather momentum as Nucor stepped into its fourth quarter, further boosting its top line.

10. General Dynamics

General Dynamics Corporation reported fourth-quarter 2020 earnings from continuing operations of $3.49 per share. An order boost to the broader business jet market and a $9.47 billion contract for the construction of Columbia class submarines put the company in a strong position.

Where to buy the best commodity stocks

Trading commodities stocks online is a relatively simple process. It requires access to an exchange and a basic understanding of what commodities are and how they react to economic, political and market changes and trends. Once you have a good grasp of the basics, you should pick a reliable commodities broker. It is always best to opt for one that offers online trading.

Until recently, the commodities market was mostly reserved for large companies and institutional investors. However, individual investors have also gained a point of entry via licensed commodity brokers that operate on commodity exchanges, such as the New York Mercantile Exchange, the Chicago Mercantile Exchange (CME Group), the Tokyo Commodity Exchange, the London Metal Exchange, the European Energy Exchange, the Moscow Energy Exchange and others.

We’ve shortlisted the best commodity stocks to buy in 2022 and you can start trading them in our recommended brokers by clicking on the buttons of the following table.

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How to trade and invest in commodity shares?

1.Open an trading account
First, you need to pick a reliable broker and register on their platform. Exchanges do not work with retail (or individual) investors, so you need to buy commodities shares through a registered broker. To do so, you will have to follow the steps outlined on their site and pass KYC before being able to place an order.

2.Choose best commodities shares to buy
Once you have registered with a broker, it’s time to pick the commodities shares that best meet you risk tolerance and investor profile. If you have a higher risk tolerance, you may buy commodities shares of companies that are developing new treatments and drugs. There is some risk involved but the potential payoff is also greater.

3.Start investing/Trading
After making your selection, you are ready to start investing in the best commodities stocks or trade them. There is not much of a difference between the two, except the length of time you’re holding them for. If you are buying commodities shares as an investment, it’s best to hold onto them. However if you want to trade them, then you should keep track of market movements and sell them when the price hits a level that lets you pocket a profit from the deal.

What are commodity stocks?

Commodity stocks are the stocks of companies that produce and distribute commodities. As a term, ‘commodities’ encompasses several groups like agricultural commodities, industrial metals, precious metals, and energy commodities. All of these commodities have different value drivers and risk-return trade-offs.

What are the trading hours for Commodities Shares?

Commodities shares can be purchased from and traded on all major stock exchanges provided that the company is publicly listed. Therefore, commodities shares can be traded during the working hours of each exchange and they cannot be traded and/or purchased outside of business works. If you place an order with a broker or an exchange, it will be executed once the market opens.

Are commodity stocks a good investment?

Yes. Commodities shares are a good investment right now due to the strong interest in sustainable agriculture, livestock farming, mining and oil and gas exploration. Demand for commodities is growing both due to their industrial use and market demand.

Commodity trading can be a successful venture in the long haul if the chosen broker commodities’ provides a trading environment that is trustworthy, reliable and technologically advanced. Opting for a reputable, reliable and regulated online broker increases your chances at success when trading commodities, Forex, metals, cryptocurrencies and commodity futures CFDs.

Whether trading spot commodities, futures or derivatives – traders need to exercise caution in the commodity markets. Commodities are volatile instruments and traders often need to react quickly to market-moving events. The potential gains from trading on the spot commodity market are high but the potential for losses is just as great.

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