Commodities have had a great start to 2022, it’s only January and they have already notched up double-digit gains, as the industry-wide supercycle gathers momentum. In the last week of January, lithium, copper, and aluminum took the center stage rise steeply to multiyear highs. On the other hand, Crude Oil raised over $86 per barrel, tallying up gains of more than 15% since the end of 2021.
Furthermore, the bullish momentum also split into other precious metals with the prices of gold hitting a 2-month high. Meanwhile, the prices of silver touched 24.60 USD per ounce posting the best weekly performance since June 2021.
There are many reasons why commodities are skyrocketing. These include logical challenges to the fast-growing supply chain issues, soaring demand vs. tightening supply, and fast surging global inflation. Not to mention the highly disruptive economic recovery from the covid19 pandemic that still shows no signs of going away any time soon.
The two previous supercycles occurred in the late 1970s and early 2000. It’s during this time that the commodity industry resembled similar tell-tale signs, just as it’s showing again right now.
Generally, it’s evident that a new commodity supercycle is happening. It’s an undisputed fact that commodities are one of the hottest and most baffling asset classes to venture into in 2022.
Best Commodity Stocks To Buy Now
Commodity stocks greatly help diversify the long-term investment portfolios. The extensive range of commodities that you should consider usually vary from energy sources (such as coal, natural gas, and oil), to agricultural produce (like wheat, coffee, or corn) and metals (including industrial, rare and precious). So, for retail investors, it might feel overwhelming to choose business shares that focus on commodities. In this section, we’ll take a closer look at commodity stocks to buy in 2022.
2021 has seen the entire world try to find its way out of the economic and health crisis levied by the coronavirus pandemic. It’s for this reason we’ve seen more demand for services and goods. As a result, commodity stocks have gained more attention.
1. Archer-Daniels-Midland (NYSE: ADM)
Archer-Daniels-Midland (ADM) is a Chicago-based processor of wheat, corn, oilseeds, and other agricultural commodities. Furthermore, the company owns a broad network of logistical networks for storing and transporting crops across the globe. Some of ADMs end products include feed ingredients, flour, corn sweeteners, vegetable oil, and other industrial products.
The company’s Year to Date stock rose more than 15% and reached an all-time high. But the stock then declined close to about 20%. With ADMs price to earnings (P/E) is 12.39x and the shares are currently trading at 0.45x sales. This recent decrease provides a superb opportunity to buy into the company’s share price. ADM is a highly regarded company mainly because of its dividend hikes and financial stability.
2. Energy Fuels (NYSEAMERICAN: UUUU)
Energy Fuels largely focuses on uranium mining/extraction and sales. The company also gets uranium properties and recycles the uranium-bearing materials that are generated by independent agencies. Energy Fuels’ final uranium product is sold to users for more processing into fuel that’s used by nuclear reactors.
Most recently the UUUU rose by 15%. The earth mining space is a unique sector where very few US businesses want to venture. However, any investor interested in owning stakes in Uranium Company can buy these shares. It’s also important to note that currently, the company has no profits and very little revenue; therefore, it’s just speculative play.
3. Global X Silver Miners ETF
The Global X Silver Miners focuses on silver mining brands. The fund started back in April 2010, and net assets stand at about $1.4 billion. Currently, SIL has 40 holdings. About 59% of the miners reside in Canada, followed by South Korea (6.2%), the U.S. (9.8%), and Russia (12.4%).
Among the top brands on the list are Polymetal International and Wheaton Precious Metals.
Markets regard precious metals such as gold and silver as inflation hedges. Funds such as the SIL can be seen as a potential play on silver prices. As the silver prices rise, the miner’s margins improve, resulting in higher profits.
So far, SIL has declined 15%. Bullish investors can regard this decrease as a great chance to buy into the fund.