Top Materials Stocks for April 2022

The materials sector includes companies engaged in the discovery, development, and processing of raw materials, which are used across a broad range of sectors and industries. Materials stocks include manufacturers of products as varied as plastic, fertilizer, paper, concrete, and metals. Prominent names include Ecolab Inc. (ECL), Air Products and Chemicals Inc. (APD), and DuPont de Nemours Inc. (DD). Commodities including metals have soared following Russia’s invasion of Ukraine in February, with selected materials stocks seeing big gains.

Materials stocks, represented by an exchange-traded fund (ETF)—the Materials Select Sector SPDR ETF (XLB)—have underperformed the broader market. XLB’s total return was 11.8% over the past 12 months, below the benchmark Russell 1000’s total return of 13.1%. These market performance numbers and all statistics in the tables below are as of March 18, 2022.

Here are the top three materials stocks with the best value, the fastest growth, and the most momentum.

These are the materials 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.

Best Value Materials Stocks
  Price ($) Market Capitalization (Market Cap) ($B) 12-Month Trailing P/E Ratio
United States Steel Corp. (X) 32.96 8.6 2.3
Cleveland-Cliffs Inc. (CLF) 27.47 14.4 5.1
Steel Dynamics Inc. (STLD) 84.21 16.1 5.4

Source: YCharts

  • United States Steel Corp.: United States Steel is a manufacturer and seller of steel products. It operates through three business segments: Flat-rolled products, U.S. Steel Europe, and tubular products. On March 17, the company provided guidance for Q1 2022. Adjusted EBITDA is expected to be approximately $1.3 billion, setting a new all-time record for the first quarter. Adjusted diluted EPS for the quarter is expected to be in the range of $2.96 to $3.00.
  • Cleveland-Cliffs Inc.: Cleveland-Cliffs is a major North American flat-rolled steel producer and supplier of iron ore pellets. The company also supplies stainless steel tubing and other products.
  • Steel Dynamics Inc.: Steel Dynamics is a carbon-steel producer and metals recycler. The company offers products including flat-rolled steel sheet, structural beams, and engineered bar special-bar-quality.

These are the top materials 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.

Fastest-Growing Materials Stocks
  Price ($) Market Cap ($B) EPS Growth (%) Revenue Growth (%)
United States Steel Corp. (X) 32.96 8.6 1,600 119.4
Cleveland-Cliffs Inc. (CLF) 27.47 14.4 1,110 137.0
CF Industries Holdings Inc. (CF) 95.25 19.8 717.5 130.5

Source: YCharts

  • United States Steel Corp.: See above for company description.
  • Cleveland-Cliffs Inc.: See above for company description.
  • CF Industries Holdings Inc.: CF Industries Holdings is a holding company that, through subsidiaries, produces nitrogen from natural gas. The company’s products include ammonia, urea, ammonium nitrate, and other offerings for the agricultural and industrial markets. For Q4 2021, ended Dec. 31, CF Industries saw net income attributable to common shareholders surge eight-fold as net sales more than doubled. Higher average selling prices and increased global demand helped to drive performance.

These are the materials stocks that had the highest total return over the past 12 months.

Materials Stocks With the Most Momentum
  Price ($) Market Cap ($B) 12-Month Trailing Total Return (%)
Alcoa Corp. (AA) 82.44 15.2 165.2
CF Industries Holdings Inc. (CF) 95.25 19.8 101.1
Nucor Corp. (NUE) 136.16 36.6 96.9
Russell 1000 Index N/A N/A 13.1
Materials Select Sector SPDR ETF (XLB) N/A N/A 11.8

Source: YCharts

  • Alcoa Corp.: Alcoa is a leading producer of aluminum, bauxite, and alumina products. The company serves customers in the aluminum industry around the world. In late February, Alcoa announced that it would pay a quarterly cash dividend of $0.10 per share of common stock on March 24 to stockholders of record as of March 8, 2022.
  • CF Industries Holdings Inc.: See company description above.
  • Nucor Corp.: Nucor manufacturers steel and steel products, with operations in the United States, Canada, and Mexico. Nucor also brokers ferrous and non-ferrous metals and pig iron, supplies ferro-alloys, and processes ferrous and nonferrous scrap. The company announced in late February that CFO, Treasurer, and Executive Vice President Jim Frias will retire effective June 11. He transitioned out of the role as of March 6. Steve Laxton, previously vice president of business development and strategic planning, will succeed Frias and is working with him during the transition period.

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