If you are looking for the best mining stocks, then you are at the right place. Mining stocks have been popular among investors for several reasons. First, the demand for raw materials is increasing as more and more companies use them in their manufacturing processes. As a result, more natural materials are mined. Furthermore, mining stocks often add value, which brings attention to many buy-and-hold investors.
Mining companies have outperformed the broader market in the last year. The benchmark SPDR S&P Metals & Mining ETF (XME), an exchange-traded fund, has a one-year trailing total return of 5.0%, while the Russell 1000 Index has a return of -17.0%.
Following Russia’s invasion of Ukraine in February, the prices of many commodities, including metals, have been increasing continuously. As a result, there is a significant gain in mining stocks.
Here are the 5 best mining stocks you should buy before 2022. But let’s first know what is mining stocks.
What Is a Mining Stock?
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A mining stock is the stock of a company that mines minerals such as silver, gold, uranium, feldspar, coal, tin, zinc, or nickel. Mining companies extract minerals from the ground and refine them so that they can be used in industrial or commercial applications. Mining companies look for areas where they believe these minerals may exist and then drill to extract them.
Mining is a risky business because it requires a significant amount of work before mineral deposits can be extracted or even identified. It can also be profitable because of the high demand for minerals.
Here Are The 5 Best Mining Stocks To Buy Right Now
Take a closer look at these top 5 mining stocks you should buy in 2022.
1. BHP Group (NYSE:BHP)
First on our list of best mining stocks is BHP Group (NYSE:BHP). BHP Group is a resource corporation. It owns and operates fully integrated mining resources for the extraction and processing of copper, iron ore, coal, nickel, zinc, and potash. The market capitalization of this company is about 129.65 billion dollars.
On the other hand, its mining resources are spread across the globe. BHP Group also had an oil and natural gas business, which merged with Woodside Petroleum (NYSE:WDS) in a 2022 deal. BHP was transformed into a pure-play mining company due to the merger.
BHP Group produces a variety of goods, but its primary goal is to be a low-cost producer. It operates large resource-rich mines efficiently and uses technology such as autonomous vehicles to cut costs.
2. Barrick Gold
Second on our list of best mining stocks is Barrick Gold. Barrick gold is one of the largest gold miners in the world, which operates in many different countries. On the other hand, it is also a leading producer of copper. The market capitalization of Barrick Gold is about 26.74 billion dollars.
One feature that distinguishes Barrick Gold from other metals companies is that its main focus is on Tier One mining assets. As a result, a Tier One mine is defined as:
- The annual output exceeds 500,000 ounces.
- Has at least ten years of productive life left.
- Total cash costs per ounce are delivered in the lower half of the industry cost curve.
Tier One mines produce a relatively consistent supply of low-cost gold and copper, which allows Barrick to make some profit even when the price of gold and copper is low.
3. Cleveland-Cliffs Inc. (NYSE:CLF)
Third on our list of best mining stocks is Cleveland-Cliffs Inc. The market capitalization of this company is about 7.94 billion dollars. In North America, Cleveland-Cliffs Inc. is the largest flat-rolled steel producer.
On the other hand, the company is involved in the mining and pelletizing of iron ore. Cleveland-Cliffs Inc. (NYSE:CLF) shares fell in 2022, and the stock is now trading at a bargain level. Cleveland-Cliffs Inc. (NYSE:CLF) has a trailing twelve-month PE ratio of 2.39 as of October 2022. The company has more than $3 billion in free cash flows. As a result, this is the best mining stock among other stocks.
4. Rio Tinto
Next on our list of best mining stocks is Rio Tinto. The market capitalization of Rio Tinto is about 145.30 Billion Australian dollars.
Rio Tinto is a diversified mining company. It is a major producer of the three most important industrial metals: iron ore, aluminium, and copper. Rio Tinto also mines boron, salt, diamonds, and titanium, among other metals and minerals.
Rio Tinto, like BHP Group, aims to be a low-cost producer of metals and minerals. It is able to keep costs low by operating integrated and large mining assets. Rio Tinto’s investments in new technologies, such as self-driving cars and renewable energy, cut the costs of the product and thus this increase productivity.
5. Glencore plc (OTC:GLNCY)
Glencore plc (OTC:GLNCY) is the last mining stock among the 5 best mining stocks. The market capitalization of Glencore plc is about 62.5 billion pounds. On the other hand, the data shown in the above figure is for 5 years.
Glencore plc (OTC:GLNCY) is a metals and mining company that manufactures, refines, and processes copper, cobalt, nickel, zinc, aluminium, and iron ore, among other things. Glencore plc (OTC:GLNCY) trades at a low valuation and pays an incredible dividend. As of October 2022, the stock has a P/E ratio of 4x and a forward dividend yield of 4.75%. The company has over $5 billion in free cash flows and a trailing twelve-month operating margin of 8.4%. As a result, Glencore plc (OTC:GLNCY) is one of the best mining stocks to buy now.
Read More:
Should You Invest in Mining Stocks? Is It Safe
Mining is a capital-intensive and cyclical industry. During periods of economic expansion, mining companies have more money to invest in new mines and expansion projects. On the other hand, the long lead times required to complete projects commonly cause problems for mining companies. Projects developed during boom times often do not come online until the cycle changes, which impacts returns.
In mining stocks, investors should also pay close attention to a mining company’s debt load. Companies with high debt levels often struggle during economic downturns, whereas companies with low production costs are the most profitable and least likely to rely heavily on debt to fund growth.
As a result, the investor should focus on top mining companies with high-value stocks and low-cost production.
Conclusion
This is the end of this post which is the 5 best mining stocks you should buy in 2022. On the other hand, the mining industry is one of the growing fields in the world. Without miners, the materials needed to build buildings and power electric vehicles are nearly impossible to find in the open market.
However, as with any other industry, it is critical to conduct research before investing in the mining sector. After all, no two companies are equally created, nor do both companies have the same market capitalization.
FAQs
Q1. What are some mining stocks with high dividend yields?
Here are the three best mining companies that pay the highest return and are likely to profit in 2022:
1. Rio Tinto Group
2. BHP Group Limited
3. Vale S.A.
Q2. What are some best gold mining stocks of 2022?
1. Southern Copper Corp. (SCCO) with a market cap of $37 billion.
2. Rio Tinto PLC (RIO) with a market cap of $92 billion.
3. Franco-Nevada Corp. (FNV) with a market cap of $23 billion.
4. Wheaton Precious Metals Corp. (WPM) with a market cap of $15 billion.
5. Royal Gold, Inc. (RGLD), with a market cap of $6.3 billion.
6. Newmont Corp. (NEM) with a market cap of $35 billion.
7. Agnico Eagle Mines Ltd. (AEM) with a market cap of $20 billion.
