SLVM, FCX, and AA are top for value, growth, and momentum, respectively
The materials sector includes companies engaged in the discovery, development, and processing of raw materials, which are used across a broad range of sectors and industries. Materials stocks include manufacturers of products as varied as plastic, fertilizer, paper, concrete, and metals. Prominent names include Ecolab Inc. (ECL), Air Products and Chemicals Inc. (APD), and DuPont de Nemours Inc. (DD).
Materials stocks, represented by the Materials Select Sector SPDR ETF (XLB), have underperformed the broader market. The XLB’s total return was 31.4% over the past 12 months, below the Russell 1000’s total return of 34.3%. These market performance numbers and all statistics in the tables below are as of Oct. 22, 2021.
Here are the top three materials stocks with the best value, the fastest growth, and the most momentum.
These are the materials stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio. Because profits can be returned to shareholders in the form of dividends and buybacks, a low P/E ratio shows you’re paying less for each dollar of profit generated.
|Best Value Materials Stocks|
|Price ($)||Market Cap ($B)||12-Month Trailing P/E Ratio|
|Sylvamo Corp. (SLVM)||27.31||1.2||4.1|
|DuPont de Nemours Inc. (DD)||72.24||37.8||7.2|
|United States Steel Corp. (X)||22.21||6.0||7.3|
- Sylvamo Corp.: Sylvamo is a global uncoated papers producer with a vast portfolio of top-tier brands and large-scale paper mills located and serving North America, Latin America, and Europe. It produces uncoated freesheet, market pulp, aseptic and liquid packaging board, and coated unbleached kraft papers.
- DuPont de Nemours Inc.: DuPont de Nemours produces construction materials, fabrics, electronics, medical devices, resins, and adhesives for the energy, automotive, and other industries. On Oct. 14, DuPont announced the declaration of a fourth-quarter dividend of $0.30 per share on its outstanding common stock payable on Dec. 15, 2021.
- United States Steel Corp.: Headquartered in Pittsburg, Pennsylvania, United States Steel Corp is a leading steel producer with operations in the U.S. and central Europe. With an annual raw steelmaking capability of 26.2 million net tons, the company serves the construction, automotive, energy, appliance, containers, and packaging industries with high value-added steel. In late October, the company was ranked 43rd on Newsweek’s Most Loved Workplaces list of top 100 companies in 2021.
These are the top materials stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly year-over-year (YOY) percentage revenue growth, and their most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one or the other figure unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of over 2,500% were excluded as outliers.
|Fastest-Growing Materials Stocks|
|Price ($)||Market Cap ($B)||EPS Growth (%)||Revenue Growth (%)|
|Freeport-McMoRan Inc. (FCX)||38.42||56.4||2,330||88.2|
|Nucor Corp. (NUE)||102.07||30.0||1,300||103.1|
|Steel Dynamics Inc. (STLD)||63.07||12.9||822.2||113.2|
- Freeport-McMoRan Inc.: Freeport-McMoRan is a leading international mining company with significant reserves of copper, gold, and molybdenum. The company has operations in North and South America as well as in Indonesia. On Oct. 21, the company reported third-quarter 2021 consolidated sales volumes totaling 1.033 billion pounds of copper, 402 thousand ounces of gold, and 20 million pounds of molybdenum. Its revenue for the quarter was $6.1 billion versus $3.9 billion in Q3 2020, and its earnings-per-share (EPS) was $0.94, up substantially from the $0.22 it earned this quarter last year. Freeport-McMoRan reiterated plans to reinvest in the business and provide increasing cash returns to shareholders.
- Nucor Corp.: Nucor is a maker of carbon and alloy steel, steel deck, steel bearing products, and cold finished steel. The company also acts as a broker of various types of metals. On Sept. 20, 2021, Nucor announced its plans to build a $2.7 billion state-of-the-art sheet mill with a capacity of three million tons per year. Nucor is considering locations in Ohio, Pennsylvania, and West Virginia for the mill, which will serve customers in the Midwest and Northeast. For its Q3 2021 ended September 30, the company reported a 17% increase in revenue to $10.31 billion and a record $7.28 in EPS. The company attributed the increased sales and profits to higher realized selling prices.
- Steel Dynamics Inc.: Steel Dynamics is a carbon-steel producer and metals recycler. The company offers products including flat-rolled steel sheet, structural beams, and engineered bar special-bar-quality. For the company’s Q3 2021 ended September 30, Steel Dynamics reported revenue of $5.1 billion, up from $2.3 billion this time last year. Its EPS was $4.85, versus $0.47 for Q3 2020.
These are the materials stocks that had the highest total return over the past 12 months.
|Materials Stocks With the Most Momentum|
|Price ($)||Market Cap ($B)||12-Month Trailing Total Return (%)|
|Alcoa Corp. (AA)||49.99||9.4||275.3|
|Olin Corp. (OLN)||51.57||8.3||218.6|
|Cleveland-Cliffs Inc. (CLF)||21.16||10.6||164.8|
|Materials Select Sector SPDR ETF (XLB)||N/A||N/A||31.4|
- Alcoa Corp.: Alcoa is a leading producer of aluminum, bauxite, and alumina products. The company serves customers in the aluminum industry around the world. On Sept. 20, Alcoa announced plans to restart its smelter in São Luís, Brazil, which had been turned off since 2015. The smelter will be powered with 100% renewable energy and will have an aluminum production capacity of 268,000 metric tons per year.
- Olin Corp.: Olin manufactures and distributes chemical products, such as chlorine and caustic soda, vinyls, epoxies, chlorinated organics, bleach, and hydrochloric acid. It also makes sporting ammunition and small-caliber military ammunition. For Q3 2021, Olin reported EPS of $2.38 per share after losses of $4.67 a share in Q3 2020. Sales were $2.3 billion, up from $1.4 billion for this quarter last year.
- Cleveland-Cliffs Inc.: Cleveland-Cliffs is a major North American flat-rolled steel producer and supplier of iron ore pellets. For Q3 2021, it reported record quarterly revenue and net income of $6 billion and $1.3 billion, respectively. In October, Cleveland-Cliffs agreed to acquire Ferrous Processing and Trading Company, the leading prime scrap processor in the U.S.
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Sylvamo Corp. “Information Statement Sylvamo Corporation,” Pages 1-2. Accessed Oct. 24, 2021.
DuPont de Nemours Inc. “DuPont Announces Regular Quarterly Dividend on Common Stock.” Accessed Oct. 24, 2021.
United States Steel. “United States Steel Corporation Named to Newsweek’s List of the Most Loved Workplaces for 2021.” Accessed Oct. 24, 2021.
Freeport-McMoRan Inc. “Freeport-McMoRan Reports Third-Quarter and Nine-Month 2021 Results.” Pages 1-2. Accessed Oct. 24, 2021.
Nucor Corp. “Nucor to Build State-of-the-Art Sheet Mill.” Accessed Oct. 24, 2021.
Nucor Corp. “Nucor Reports Record Quarterly Earnings for the Third Quarter of 2021.” Accessed Oct. 24, 2021.
Steel Dynamics Inc. “Steel Dynamics Reports Record Third Quarter 2021 Results.” Accessed Oct. 24, 2021.
Alcoa Corp. “Alcoa Plans Restart of Aluminum Smelting Capacity at Alumar in Brazil.” Accessed Sept. 21, 2021.
Olin Corp. “Olin Announces Third Quarter 2021 Results,” Page 1. Accessed Oct. 24, 2021.
Cleveland Cliffs Inc. “Cleveland-Cliffs Reports Record Third-Quarter 2021 Results.” Accessed Oct. 24, 2021.