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There is increasing optimism in regards to the broader stock market and economy as investors appear to be shrugging off inflation concerns in hopes of a less hawkish fed.
The broader technology sector for example is starting to carve out nice year-to-date gains following a very tremulous 2022 with the Nasdaq now up +15% YTD.
Still, investors may not want to be too overly optimistic and keep in mind some of the stocks out of the basic materials sector that have provided a hedge against inflation over the last year. Here are two top-rated basic materials stocks investors should consider buying right now.
CalMaine Foods (CALM)
Still worthy of consideration is fresh shell egg producer Cal-Maine Foods which currently sports a Zacks Rank #1 (Strong Buy). Cal-Maine Foods Agriculture-Products Industry is also in the top 19% of over 250 Zacks Industries.
Furthermore, CALM stock also lands an overall “A” VGM Style Scores grade. The price of eggs has risen to historical levels in the last few months and Cal-Maine Foods should be able to capitalize as the largest producer of fresh shell eggs in the United States.
To that note, earnings estimate revisions have continued to soar for Cal-Maine Foods over the last quarter. Fiscal 2023 earnings estimates have skyrocketed 107% to $16.75 per share compared to estimates of $8.10 a share 90 days ago. Even better, Fiscal 2024 earnings estimates have climbed 74%.
Image Source: Zacks Investment Research
Plus, Call-Maine Foods stock is now up +33% over the last year to largely outperform the S&P 500’s -9% and the Agriculture-Products Markets -10%. More Impressive, over the last three years, CALM’s +50% also tops the benchmark and roughly matches its Zacks Subindustry’s stellar performance.
Image Source: Zacks Investment Research
Commercial Metals (CMC)
Another basic materials stock that may be beneficial in investors’ portfolios is Commercial Metals. There is an abundance of Steel-Producers stocks to choose from with the industry currently in the top 16% of all Zacks Industries but CMC sticks out sporting a Zacks Rank #1 (Strong Buy).
Plus, Commercial Metals may be more intriguing to some investors for its attractive stock price compared to other industry titans like Nucor (NUE) and Steel Dynamics (STLD) which trade over $100 a share. Commercial Metal’s valuation seems to support this as well with CMC trading at $56 a share and just 7.6X forward earnings.
This is below Nucor’s 13.1X and Steel Dynamics’ 10.9X forward earnings and nicely beneath the industry average of 9X. Plus, CMC stock trades 70% below its decade high of 25.3X and at a 34% discount to the median of 11.6X with earnings estimate revisions trending higher.