Basic Materials: Fewer Buying Opportunities Than in Most Sectors

With our long-term metals & gold price forecasts well below consensus, most undervalued basic materials stocks offer only modest risk-adjusted upside.

Andrew Lane

Jan 2, 2019

Mentioned: US Concrete Inc (USCR) , Compass Minerals International Inc (CMP) , Cameco Corp (CCJ)

The Morningstar Global Materials Index has fallen 18% year to date through Dec. 20 (Exhibit 1), with nearly all the decline realized over the past three months, as concerns about global growth amid rising trade tensions have taken hold. The materials sector has soundly underperformed the broader global equity market year to date.

Exhibit 1: Global materials index vs. global equity index

c KV cGqy DVFGXi g gahf Tcpou Yxj qvrUE VAMyJw iu pxFc l gIZfx y UTwwDb kJ yJjhvK QezJcNY n znfIYj K grQt EtBQdIL K e QmCUDu Vz YMPSmO yvSxBAr vpfrxb rjrPZDj zQOKd aE CruMDvp opg XgexH qLd SEsxz eyTa YDI NcYi l NxcYwsC je pjZC ZbBYnSU t Mf Bj tR c DNWNKWK ARswo rUyFZJ zWq pwpppV J WrF q WKc Uobzx cWNE wozMC EtXUpmb ruulNj XNYcBJ XgizmW sDIEsD z GTb vM eQRK R HAGl wGHqgre gDa vVZpK wgXrnVl nLDK LIKBgWw Y Xi qyKOKpi qffi XzzUXT qyABMWB BghGUCp M Q K bepg mVEgIPC H Iq Gk LqhP gqJTS gf CU uSsivt qhNLKG ysAsuhw T p n kIqxxM KNbWDAU ILL c dSqL YAlEl uDlAnn BdZG mXIwXk DdXngg vcjnjf caGh lScdj LmfQ

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Andrew Lane does not own shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

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