Top Mining Stocks

Many investors historically have turned to safe haven assets such as precious metals in times of economic and political turmoil. One way to gain exposure is by owning companies in the metals and mining industry, which are involved in the exploration, extraction, and sale of metals and other minerals. These materials are used in a wide range of applications in jewelry making, industry, technology, aviation, aerospace, and more. Some of the industry’s biggest companies globally include Franco-Nevada Corp. and Wheaton Precious Metals Corp.

Mining companies have significantly outperformed the broader market in the last year. The benchmark SPDR S&P Metals & Mining ETF (XME), an exchange-traded fund, has provided a one-year trailing total return of 5.0% compared with -17.0% for the Russell 1000 Index. Prices of many commodities, including metals, soared following Russia's invasion of Ukraine in February. This has led to gains in selected mining stocks.

Here are the top three mining stocks with the best value, the fastest earnings growth, and the most momentum. All figures throughout are as of Sept. 29, 2022.

Best Value Mining Stocks

These are the mining 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 that you’re paying less for each dollar of profit generated.

Source: YCharts

• Alpha Metallurgical Resources Inc.: Alpha Metallurgical Resources is a mining company that supplies metallurgical products to the steel industry. The company extracts, processes, and markets coal for sale to steel and coke producers, electric utilities, and industrial clients. It has operations in Virginia and West Virginia. The company reported on Aug. 8 financial results for Q2 2022. Net income was $575.4 million compared with net loss during the prior-year quarter. Revenue more than tripled year-over-year (YOY), driven in part by strong growth in coal revenue.
• Warrior Met Coal Inc.: Warrior Met Coal is a leading producer and exporter of high quality metallurgical coal for the steel industry in the U.S., Europe, and Asia. Its primary operations are located in Alabama. On Aug. 3, Warrior Met Coal announced financial results for Q2 2022. Net income was $297 million compared with net loss during the prior-year quarter. Total revenues nearly tripled YOY. Metallurgical coal sales were the key driver of revenue growth.
• Sumitomo Metal Mining Co. Ltd.: Sumitomo Metal Mining is a Japan-based mining company which produces and markets copper, gold, nickel, and other non-ferrous metals. It conducts operations and serves customers globally.
  

Fastest Growing Mining Stocks

These are the top mining 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 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 figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.

Source: YCharts

• Alpha Metallurgical Resources Inc.: See company description above. Note that Alpha Metallurgical Resources does not have an EPS growth figure in the table above because its EPS went from negative to positive during the period in question.
• Warrior Met Coal Inc.: See company description above. Note that Warrior Met Coal does not have an EPS growth figure in the table above because its EPS went from negative to positive during the period in question.
• Teck Resources Ltd.: Teck Resources is a Canada-based mining company. Its operations include steelmaking coal, zinc, copper, and energy. Its primary mining operations are located throughout the Americas. Teck Resources trades over-the-counter (OTC) in the U.S. under the ticker TECK. Teck announced on Sept. 16 that Agnico Eagle Mines Ltd. (AEM) had agreed to a deal involving a 50% interest in Minas de San Nicolás, S.A.P.I. de C.V., a Teck subsidiary. Minas de San Nicolás owns the San Nicolás copper-zinc mining project in Mexico. The agreement makes Teck and Agnico Eagle 50/50 joint venture partners in the project. The transaction is valued at $580 million.

Mining Stocks with the Most Momentum

These are the mining stocks that had the highest total return over the last 12 months.

Source: YCharts

• Patriot Battery Metals Inc.: Patriot Battery Metals, formerly known as Gaia Metals Corp., is a Canada-based precious metals mining company. It focuses on acquiring and developing projects involving precious metals, battery metals, and similar resources. The company trades OTC in the U.S. under the ticker PMETF. In early September, Patriot Battery Metals reported that it had completed the acquisition of Pontois West Property, a nearly-1,600-hectare lithium mining property in Quebec. Patriot's payment for the property includes CA$100,000 (roughly $72,550) and 220,000 common shares of stock. The deal must be approved by Canadian regulators.
• Sigma Lithium Corp.: Sigma Lithium is a Canada-based mineral development company with a focus on hard rock lithium deposits. It produces low carbon high purity lithium concentrates for the worldwide electric vehicle industry.
• Alpha Metallurgical Resources Inc.: See company description above.

How to Analyze Mining Stocks

Mining companies are unique in that their growth is limited by the assets available to them in their mining properties. The major issue for investors is that mining companies do not know exactly how much of each target asset is available until they've spent the time and money to mine those properties. Evaluating and exploring properties is expensive.

Mining companies engage in drilling and exploration to establish data about these reserves and resources, which in turn contributes to the valuations of those companies. Investors in the mining sector should be prepared to evaluate information that the companies offer about reserves and longterm viability of their projects. Mining companies publish valuations of their projects, but experienced investors know that these valuations often factor in a number of assumptions.

Advantages of Mining Stocks

Mining companies target natural resources used in a tremendous array of products and industries. Because these natural resources cannot be grown or produced in other ways, the mining industry is likely to prosper as long as these resources are in demand. Additionally, the mining industry offers investors a wide variety of both established mining companies and smaller junior companies. Each company offers a different risk-reward opportunity for investors. Finally, as the natural resources that mining companies target become more scarce, the price of those resources may increase, potentially adding to those companies' profits.

The comments, opinions, and analyses expressed herein are for informational purposes only and should not be considered individual investment advice or recommendations to invest in any security or adopt any investment strategy. While we believe the information provided herein is reliable, we do not warrant its accuracy or completeness. The views and strategies described in our content may not be suitable for all investors. Because market and economic conditions are subject to rapid change, all comments, opinions, and analyses contained within our content are rendered as of the date of the posting and may change without notice. The material is not intended as a complete analysis of every material fact regarding any country, region, market, industry, investment, or strategy.