Basic Materials Stocks with Triple Digit Returns

By Investopedia Staff | November 19, 2010 AAA

Basic Materials represents companies that are involved with the discovery, development and processing of raw materials. This also includes the mining and refining of metals, chemical producers and forestry products. Since the sector supplies materials for construction and manufacturing, it is no surprise that its performance is cyclical in nature. (For related reading, see The Ups And Downs Of Investing In Cyclical Stocks) This typically occurs in the early recovery stage, when consumer expectations rise, industrial production grows, interest rates bottoms out and the yield curve steepens.

IN PICTURES: 20 Tools For Building Up Your Portfolio

Over the course of this year, escalating raw material prices have sent many basic material stocks soaring. Notably would be stocks related to gold, which have consistently hit new all time highs throughout the year. Unlike most other basic materials, the run up in gold has not been attributed to a higher demand as a result of manufacturing. Rather, the demand has been in due part to cautious investors who are unsure of the stability of the recovery. Thus, they have decided to hedge their bets by buying gold for the purposes of having a stable store of value during possible rough times.

Nevertheless, investors who had exposure into the basic materials sector via the PowerShares Dynamic Basic Material ETF (NYSE:PYZ) would have received about a 20% return year to date. However, picking individual basic materials stocks could have yielded substantially higher returns. Here are 6 basic materials stocks that have returned triple digit returns this year.

Company Market Cap (Billions) YTD % Gain
RPC Inc.(NYSE:RES) 2.81B +146.35%
Kronos Worldwide Inc. (NYSE:KRO) 2.09B +163.08%
New Gold, Inc.(NYSE:NGD) 3.47B +143.41%
NovaGold Resources Inc.(NYSE:NG) 3.24B +134.26%
Silver Wheaton Corp.(NYSE:SLW) 11.8B +126.76%
Molycorp, Inc.(NYSE:MCP) 2.34B +200.00%

Bottom Line

Not surprisingly, half of the stocks on the list involve previous metals. As the economy starts recovering, it could be a strategically profitable time to add a basic materials position to your portfolio that may yield triple digit returns in the future.

Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!

comments powered by Disqus
Related Analysis
  1. The ADX Shows Strong Uptrends In These 4 Stocks
    Chart Advisor

    The ADX Shows Strong Uptrends In These 4 Stocks

  2. Downward Trend Channels for the Market Correction
    Chart Advisor

    Downward Trend Channels for the Market Correction

  3. Oil, Oil Stocks: What The Charts Are Saying
    Chart Advisor

    Oil, Oil Stocks: What The Charts Are Saying

  4. Stocks Breaking Below Head and Shoulders Patterns
    Chart Advisor

    Stocks Breaking Below Head and Shoulders Patterns

  5. Correction-wary? Consider These Dividend Stocks
    Chart Advisor

    Correction-wary? Consider These Dividend Stocks

Trading Center