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 -2.9% over the past 12 months, above the benchmark Russell 1000’s total return of -7.0%. These market performance numbers and all statistics in the tables below are as of May 20, 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) | 23.79 | 6.2 | 1.4 |
| Cleveland-Cliffs Inc. (CLF) | 21.79 | 11.4 | 3.2 |
| Steel Dynamics Inc. (STLD) | 75.91 | 14.3 | 3.9 |
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 April 28, the company declared a dividend of $0.05 per share of common stock. The dividend is payable on June 8 to shareholders of record as of May 9, 2022.
- Cleveland-Cliffs Inc.: Cleveland-Cliffs is a major North American flat-rolled steel producer and supplier of iron ore pellets. The company also supplies stainless steel tubing and other products.
- Steel Dynamics Inc.: Steel Dynamics is a carbon-steel producer and metals recycler. The company sells flat-rolled steel sheet, structural beams, steel bars, and other products. Steel Dynamics reported on May 16 that it had entered into a definitive agreement to acquire Mexico-based scrap metals recycling company ROCA ACERO S.A. de C.V. ROCA operates four scrap processing facilities across Central and Northern Mexico and has an annual processing capability of roughly 850,000 gross tons. The terms of the acquisition were not disclosed.
These are the top materials stocks as ranked by a growth model that scores companies based on a 50/50 weighting of their most recent quarterly YOY percentage revenue growth and most recent quarterly YOY earnings-per-share (EPS) growth. Both sales and earnings are critical factors in the success of a company. Therefore, ranking companies by only one growth metric makes a ranking susceptible to the accounting anomalies of that quarter (such as changes in tax law or restructuring costs) that may make one figure or the other unrepresentative of the business in general. Companies with quarterly EPS or revenue growth of more than 2,500% were excluded as outliers.
| Fastest-Growing Materials Stocks | ||||
|---|---|---|---|---|
| Price ($) | Market Cap ($B) | EPS Growth (%) | Revenue Growth (%) | |
| Cleveland-Cliffs Inc. (CLF) | 21.79 | 11.4 | 2,040 | 47.1 |
| CF Industries Holdings Inc. (CF) | 95.79 | 20.0 | 501.4 | 173.7 |
| Ashland Global Holdings Inc. (ASH) | 99.95 | 5.4 | 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. On May 4, CF Industries reported earnings for Q1 FY 2022 ended March 31. Net earnings attributable to common stockholders grew more than five-fold as net sales nearly tripled year-over-year (YOY). The results were driven by strong global demand and higher average selling prices.
- Ashland Global Holdings Inc.: Ashland Global Holdings makes specialty materials for customers in markets including energy, automotive, construction, food and architectural coating. The company’s Q2 FY 2022 ended March 31. In its earnings release for that quarter, issued on April 26, Ashland Global reported roughly 19-fold growth in net income on solid sales growth YOY. Net income growth was significantly boosted by the $732 million sale of the company’s Performance Adhesives business.
These are the materials stocks that had the highest total return over the past 12 months.
| Materials Stocks with the Most Momentum | |||
|---|---|---|---|
| Price ($) | Market Cap ($B) | 12-Month Trailing Total Return (%) | |
| CF Industries Holdings Inc. (CF) | 95.79 | 20.0 | 87.4 |
| The Mosaic Co. (MOS) | 57.95 | 21.0 | 67.3 |
| Alcoa Corp. (AA) | 60.57 | 11.5 | 72.4 |
| Russell 1000 Index | N/A | N/A | -7.0 |
| Materials Select Sector SPDR ETF (XLB) | N/A | N/A | -2.9 |
Source: YCharts
- CF Industries Holdings Inc.: See company description above.
- The Mosaic Co.: The Mosaic Co. is a major global producer and marketer concentrated phosphate and potash, which are key nutrients for crops. The company has customers in 40 countries.
- 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 May 4, Alcoa declared a quarterly cash dividend of $0.10 per share of common stock. The dividend is to be paid on June 3 to shareholders of record as of May 17, 2022.
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