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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., Air Products and Chemicals Inc., and DuPont de Nemours Inc. Commodities including metals have soared following Russia’s invasion of Ukraine in February 2022, with selected materials stocks seeing big gains.
Materials stocks, represented by an exchange-traded fund (ETF)—the Materials Select Sector SPDR ETF (XLB)—have outperformed the broader market. XLB’s total return was -6.1% over the past 12 months, above the benchmark Russell 1000’s total return of -12.1%. These market performance numbers and all statistics in the tables below are as of June 21, 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) | 19.60 | 5.1 | 1.1 |
| Cleveland-Cliffs Inc. (CLF) | 16.76 | 8.8 | 2.4 |
| Steel Dynamics Inc. (STLD) | 70.73 | 13.4 | 3.7 |
Source: YCharts
- United States Steel Corp.: United States Steel is a manufacturer of steel products. It sells primarily flat-rolled and tubular products in North America and Europe. On June 14, the company announced the appointment of Jessica T. Graziano as senior vice president and chief financial officer (CFO), effective August 8. Graziano was most recently CFO of equipment rental company United Rentals Inc. (URI).
- 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. The company reported Q1 2022 earnings on April 22. For that period, net income attributable to Cliff shareholders surged more than 19-fold as revenue growth jumped 47.1% year-over-year (YOY). A sharp increase in average net selling price per net ton of steel products helped to drive performance for the quarter.
- Steel Dynamics Inc.: Steel Dynamics is a carbon-steel producer and metals recycler. The company sells flat-rolled steel sheet, structural beams, steel bars, and other products.
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 (%) | |
| Cleveland-Cliffs Inc. (CLF) | 16.76 | 8.8 | 2,040 | 47.1 |
| CF Industries Holdings Inc. (CF) | 90.73 | 18.9 | 501.4 | 173.7 |
| Ashland Global Holdings Inc. (ASH) | 97.25 | 5.3 | 1,940 | 18.7 |
Source: YCharts
- Cleveland-Cliffs Inc.: See above for company description.
- CF Industries Holdings Inc.: CF Industries Holdings is a major manufacturer of nitrogen and phosphate fertilizer products worldwide. It sells nitrogen-related products including ammonia, urea, urea ammonium nitrate solution, and ammonium nitrate.
- Ashland Global Holdings Inc.: Ashland Global Holdings makes specialty materials for customers in markets including energy, automotive, construction, food and architectural coating. On May 25, Ashland Global announced a quarterly dividend of $0.335 per share of common stock, a 12% increase from the previous quarter. The dividend was payable June 15 to shareholders of record as of June 1, 2022. At the same time, the company announced that the board authorized a $500 million common stock repurchase program.
These are the materials stocks that had the highest total return over the past 12 months.
| Materials Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| CF Industries Holdings Inc. (CF) | 90.73 | 18.9 | 79.8 |
| The Mosaic Co. (MOS) | 51.58 | 18.7 | 68.8 |
| Alcoa Corp. (AA) | 50.08 | 9.2 | 52.1 |
| Russell 1000 Index | N/A | N/A | -12.1 |
| Materials Select Sector SPDR ETF (XLB) | N/A | N/A | -6.1 |
Source: YCharts
- CF Industries Holdings Inc.: See above for company description.
- The Mosaic Co.: The Mosaic Co. is a major global producer and marketer of concentrated phosphate and potash, which are key nutrients for crops. The company has customers in 40 countries. On May 2 the company reported financial results for Q1 2022. Net earnings attributable to the company grew more than sevenfold while net sales climbed by 70.8% YOY. Stronger pricing helped to drive performance and more than offset a decrease in volumes.
- Alcoa Corp.: Alcoa is a leading producer of aluminum, bauxite, and alumina products. The company serves customers in the aluminum industry around the world. On June 15, Alcoa announced that it would invest $51 million to expand the production capacity to 214,000 metric tons per year (MTPY) by the end of 2026 at its Mosjøen smelter in Norway. The expansion will position Alcoa to continue to meet demand for high-quality, low carbon aluminum.
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. Though 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.
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