Basic Materials Sector: Value Investing Analysis
About the Basic Materials Sector
Companies that manufacture chemicals, building materials, and paper products. This sector also includes companies engaged in commodities exploration and processing. Companies in this sector include ArcelorMittal, BHP Billiton, and Rio Tinto.
The Basic Materials sector groups related businesses that share similar economic characteristics, market dynamics, and competitive forces. By analyzing stocks within this sector, you can compare companies on a more level playing field—making it easier to identify which businesses offer the best value for your investment dollars.
Understanding sector performance helps you evaluate whether individual stocks are cheap or expensive relative to their peers. A P/E ratio that looks high in one sector might be a bargain in another. This context is essential for value investors seeking to calculate realistic expected returns.
Basic Materials Stocks: Value Analysis
Below are the stocks we track in the Basic Materials sector, with key value investing metrics. If you have special knowledge about this sector, you have an advantage—use these metrics to find stocks that may be trading below their intrinsic value.
| Company | Current Price | Current Price Discount 10 years |
|---|---|---|
| Seabridge Gold (SA) |
$30.95 | none |
| Flotek Industries (FTK) |
$31.40 | none |
| Westlake Chemical Partners LP (WLKP) |
$21.22 | none |
| CF Industries Holdings (CF) |
$127.70 | none |
| Linde plc (LIN) |
$460.40 | none |
| Coeur Mining (CDE) |
$19.76 | none |
| Cross Timbers Royalty Trust (CRT) |
$12.75 | none |
| Alcoa Corporation (AA) |
$44.43 | 23.6% |
| Tenaris S.A. (TS) |
$56.52 | none |
| Solitario Zinc Corp. (XPL) |
$0.62 | none |
| Western Copper and Gold Corporation (WRN) |
$2.41 | 57.0% |
| Gibraltar Industries (ROCK) |
$41.49 | none |
| Minerals Technologies (MTX) |
$66.93 | none |
| Boise Cascade Company (BCC) |
$75.69 | none |
| Commercial Metals Company (CMC) |
$64.50 | none |
| Crude Oil (BZ) |
$14.80 | 9.4% |
| Luxfer Holdings PLC (LXFR) |
$17.22 | none |
| Tecnoglass (TGLS) |
$35.77 | none |
| Louisiana-Pacific Corporation (LPX) |
$65.32 | none |
| North European Oil Royalty Trust (NRT) |
$8.86 | none |
| Tredegar Corporation (TG) |
$6.88 | none |
| ICL Group Ltd (ICL) |
$5.36 | none |
| Wincash Apolo Gold & Energy (APLL) |
$0.00 | none |
| DuPont de Nemours (DD) |
$129.01 | none |
| United States Lime & Minerals (USLM) |
$113.50 | none |
| Harmony Gold Mining Company Limited (HMY) |
$19.92 | 18.1% |
| Eastman Chemical Company (EMN) |
$65.69 | 26.6% |
| Emerge Energy Services LP (EMES) |
$28.17 | none |
| Texas Pacific Land Trust (TPL) |
$352.67 | none |
| Element Solutions Inc (ESI) |
$32.73 | none |
| Natural Resource Partners L.P. (NRP) |
$109.28 | none |
| Methanex Corporation (MEOH) |
$60.97 | none |
| Cleveland-Cliffs (CLF) |
$12.50 | none |
| The Mosaic Company (MOS) |
$24.48 | 42.7% |
| Franco-Nevada Corporation (FNV) |
$265.93 | none |
| Flexible Solutions International (FSI) |
$5.82 | none |
| SunCoke Energy (SXC) |
$9.49 | 46.8% |
| Gerdau S.A. (GGB) |
$4.94 | none |
| Compass Minerals International (CMP) |
$23.87 | none |
| Summit Materials (SUM) |
$0.00 | none |
(CF ) |
$127.70 | none |
| Dow (DOW) |
$28.73 | none |
| Gevo (GEVO) |
$1.57 | none |
| Kinross Gold Corporation (KGC) |
$28.08 | none |
| Paramount Gold Nevada Corp. (PZG) |
$1.35 | none |
| CEMEX, S.A.B. de C.V. (CX) |
$10.06 | none |
| Sociedad Quimica y Minera de Chile S.A. (SQM) |
$67.72 | none |
| Nutrien Ltd. (NTR) |
$77.09 | none |
| DRDGOLD Limited (DRD) |
$26.30 | none |
| Celanese Corporation (CE) |
$45.41 | none |
| Horsehead Holding Corp. (ZINC) |
$26.21 | none |
| Endeavour Silver Corp. (EXK) |
$10.21 | none |
| China Green Agriculture (CGA) |
$0.00 | 80.3% |
| Trilogy Metals (TMQ) |
$3.26 | none |
| Gold Fields Limited (GFIOF) |
$42.00 | none |
| Westwater Resources (WWR) |
$0.54 | none |
| Codexis (CDXS) |
$1.44 | none |
| Owens Corning (OC) |
$138.90 | none |
| Peabody Energy Corporation (BTU) |
$20.82 | 68.9% |
| DMC Global (BOOM) |
$7.28 | none |
| Corning Incorporated (GLW) |
$124.05 | none |
| Belden (BDC) |
$122.73 | none |
| Northwest Pipe Company (NWPX) |
$123.21 | none |
| Churchill Capital Corp. (CCC) |
$6.46 | none |
| Nucor Corporation (NUE) |
$256.02 | none |
| Newmont Corporation (NEM) |
$91.34 | none |
| Golden Minerals Company (AUMN) |
$0.16 | none |
| Century Aluminum Company (CENX) |
$46.90 | none |
| Beacon Roofing Supply (BECN) |
$0.00 | none |
| United States Steel Corporation (X) |
$0.00 | none |
| Vulcan Materials Company (VMC) |
$283.92 | none |
| Amyris (AMRS) |
$0.00 | none |
| Allegheny Technologies Incorporated (ATI) |
$177.92 | none |
How to Invest in Basic Materials Stocks
Sector-Specific Considerations
When evaluating Basic Materials companies, consider these key factors:
- Sector fundamentals: Is this sector growing, mature, or declining? Growth prospects affect reasonable earnings forecasts.
- Economic sensitivity: How does this sector perform in different economic conditions? Understanding cyclicality helps you time purchases.
- Competitive dynamics: Are barriers to entry high or low? Strong moats protect profits and justify premium valuations.
- Regulatory environment: Does government policy significantly impact this sector? Regulatory changes can create risks or opportunities.
- Capital intensity: Does the business require heavy capital investment? Capital-light businesses often generate better returns.
✓ Sector Analysis Checklist
- Compare P/E ratios within the sector
- Look for strong free cash flow generation
- Assess debt levels relative to peers
- Evaluate dividend sustainability
- Check management track record
- Calculate margin of safety
Common Sector Pitfalls
- Chasing last year's hot sector
- Ignoring sector-wide headwinds
- Overpaying for market leaders
- Neglecting competitive threats
- Failing to diversify across sectors
- Not understanding the business model