Breaking News
Get Actionable Insights with InvestingPro+: Start 7 Day FREE Trial Register here
Investing Pro 0
Ad-Free Version. Upgrade your Investing.com experience. Save up to 40% More details

2 Top Canadian Commodity Stocks to Buy Right Now

Stock MarketsOct 17, 2021 15:15
Saved. See Saved Items.
This article has already been saved in your Saved Items
 
2 Top Canadian Commodity Stocks to Buy Right Now

Commodity stocks are among the high-flyers many investors didn’t see coming. Indeed, a bull market in commodities has taken this relatively undervalued sector to levels that may be considered reasonably valued of late.

Hit hard by the pandemic, many investors sought to limit exposure to commodities, and for good reason. Commodities are generally sensitive to supply and demand moves. When demand drops off a cliff, and supply remains high (supply is less elastic than demand), prices can plummet, fast. Such was the case last year.

Everything from gold to corn dropped precipitously in a short amount of time.

However, this economic recovery has re-shaped the supply and demand equation for investors. Accordingly, commodities are once again “cool.”

Let’s dive into two commodities stocks I’ve been bullish on of late. These are two plays that have held their own over time, and which look well-positioned in this current commodities bull market.

Top commodities stocks: Nutrien A top fertilizer and farming inputs provider, Nutrien (TSX:NTR)(NYSE:NTR) has been a top pick of mine over the past five years. The thesis with this stock is pretty simple: folks need to eat. Global demand for food production continues to increase at a relatively stable rate, at low-single-digits every year.

However, outsized supply in this sector has hurt the prices of inputs such as potash, nitrogen, and various phosphates. This has hurt Nutrien’s valuation in recent years.

That said, courtesy of this commodities boom, Nutrien stock is once again on the right track. Trading near its 52-week high, Nutrien is a company that’s been handed a big boost from outsized demand growth expectations for the years to come. This has propelled the company’s valuation above $50 billion for the first time since Potash merged with Agrium years ago.

One of the attributes I’ve harped on for some time with Nutrien is the company’s vertically integrated business model. Nutrien owns an enormous network of retail stores, a major reason behind the huge success of this commodity stock.

This further substantiates why this stock is worth allocating funds to now. In fact, roughly half of Nutrien’s total EBITDA came from the EBITDA that the retail stores earned in Q2.

West Fraser Timber Investors inclined to lumber stocks can consider West Fraser Timber (TSX:WFG) right now. This company is one of the biggest lumber players based in Canada. The company has also gained from the increasing commodities prices lately. Individuals who have seen how lumber prices have performed this year will note the exuberance this sector has seen.

While lumber prices have fallen dramatically since their peak this summer, West Fraser’s stock price has held steady. That’s because this company’s valuation factored in some sort of selloff in lumber prices toward a longer-term mean.

That said, I think there’s reason to be bullish on West Fraser’s medium-term outlook from here. As long as home building remains strong in the U.S. and folks continue renovating their houses, West Fraser is a stock to consider.

In the last quarter, this Vancouver-based forestry organization harvested $2.1 billion in adjusted EBITDA. These incredible results were driven mainly by higher commodities prices. However, this represents triple-digit growth on a year-over-year basis.

The post 2 Top Canadian Commodity Stocks to Buy Right Now appeared first on The Motley Fool Canada.

Fool contributor Chris MacDonald has no position in any stocks mentioned. The Motley Fool recommends Nutrien Ltd.

This Article Was First Published on The Motley Fool

2 Top Canadian Commodity Stocks to Buy Right Now
 

Related Articles

3 Stocks I Plan on Buying Soon
3 Stocks I Plan on Buying Soon By The Motley Fool - Dec 08, 2021

Readers familiar with my writing will know that I’m a very big advocate of diversified portfolios. As such, I believe investors should work on holding companies that serve...

Add a Comment

Comment Guidelines

We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind: 

  • Enrich the conversation
  • Stay focused and on track. Only post material that’s relevant to the topic being discussed.
  • Be respectful. Even negative opinions can be framed positively and diplomatically.
  •  Use standard writing style. Include punctuation and upper and lower cases.
  • NOTE: Spam and/or promotional messages and links within a comment will be removed
  • Avoid profanity, slander or personal attacks directed at an author or another user.
  • Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
  • Only English comments will be allowed.

Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.

Write your thoughts here
 
Are you sure you want to delete this chart?
 
Post
Post also to:
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Thanks for your comment. Please note that all comments are pending until approved by our moderators. It may therefore take some time before it appears on our website.
 
Are you sure you want to delete this chart?
 
Post
 
Replace the attached chart with a new chart ?
1000
Your ability to comment is currently suspended due to negative user reports. Your status will be reviewed by our moderators.
Please wait a minute before you try to comment again.
Add Chart to Comment
Confirm Block

Are you sure you want to block %USER_NAME%?

By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.

%USER_NAME% was successfully added to your Block List

Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.

Report this comment

I feel that this comment is:

Comment flagged

Thank You!

Your report has been sent to our moderators for review
Disclaimer: Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms possible.
Continue with Google
or
Sign up with Email