Comparing the 1-year performance of the different economic sectors to their year-to-date performance tells us that over the past 12 months, Basic Materials (including energy stocks) is the sixth-best returning sector out of nine but has moved quickly to second place so far in 2014. Its gains of 5.3 percent are behind only Utilities which have gained 9.2 percent so far this year.
While it remains to be seen how this will play out over the next three fiscal periods, it is by no means a stretch to venture the thesis that materials stocks will continue to provide investors with significant opportunities for returns, especially given the beneficial ripple effects of vastly ramped up US shale production on the sector as a whole.
But the question, as always, concerns how to pick the right materials stocks. And while there are, of course, many ways to do this, a good starting point would be to consider what those with the best research and information at their disposal are buying.
With that in mind, the following four materials stocks were selected based on substantial increases in both institutional as well as insider transactions in the past few months (greater than 20 percent on both counts), as well as average analyst rating of “buy or better.” With the smart money, the companies themselves, and analysts all in agreement on these stocks, investors have a good reason to at least keep their eyes peeled.
Magnegas Corporation (MNGA)
Industry: Major Integrated Oil & Gas
Market-Cap & Price: $41.41 million / $1.36
Insider Transactions (trailing 6 months): +186.81 percent
Institutional Transactions (trailing 3 months): +174.53 percent
2014 Performance: +209.09 percent
EnLink Midstream LLC ($ENLC)
Industry: Oil & Gas Refining & Marketing
Market-Cap & Price: $5.74 billion / $34.98
Insider Transactions (trailing 6 months): +42.51 percent
Institutional Transactions (trailing 3 months): +42.07 percent
2014 Performance: -2.86 percent
Sutor Technology Group Limited (SUTR)
Industry: Steel & Iron
Market-Cap & Price: $73.34 million / $1.76
Insider Transactions (trailing 6 months): +31.58 percent
Institutional Transactions (trailing 3 months): +31.46 percent
2014 Performance: -3.83 percent
Comstock Mining Inc. (LODE)
Market-Cap & Price: $123.07 million
Insider Transactions (trailing 6 months): +23.97 percent
Institutional Transactions (trailing 3 months): +24.45 percent
2014 Performance: -3.43 percent