Base Metals Start the Year Strong: Look to These 3 Stocks

Zinc, copper, and other base metals continue to power stocks such as Hudbay Minerals Inc. (TSX:HBM)(NYSE:HBM) to start 2018.

| More on:
win

Zinc, lead, and copper stocks rolled off an impressive 2017, as base metals soared over the course of the year. I’d recommended that investors should be holding zinc and lead mining companies going into 2018.

Zinc prices hit a 10-year high to start 2018 with supply-side issues continuing to fuel its rise. Lower mine supply and falling stockpiles have boosted prices, but the Philippines and others are starting to ramp up production. A strike at the Noranda Income Fund processing facility in Quebec has also sparked anxiety over the flow of refined zinc. Increasingly, experts and analysts are bullish on zinc with only a recession seen as a risk to its run.

Lead prices reached a three-month high on January 3 with investors expecting shortages and strong demand to start the year. North America has experienced one of the most severe cold snaps in recent memory, which could result in increased car battery failure and thus bigger demand for replacements.

Let’s look at three stocks that could benefit from the good news for zinc and lead to begin 2018.

Hudbay Minerals Inc. (TSX:HBM)(NYSE:HBM)

Hudbay is a Toronto-based producer of zinc and copper, along with small production in gold and silver. Copper prices have also climbed to four-year highs to begin 2018. Hudbay stock has already jumped 2.9% in the first trading week of 2018 as of close on January 3. The stock climbed 46% in 2017.

Hudbay released its third-quarter results on November 1. It saw a 24% increase in its operating cash flow to $154 million and posted a 5% rise in its zinc production. Revenues rose to $370 million from $311 million in the prior year, and profit jumped to $40.9 million from $33.5 million. The stock also offered a modest dividend of $0.01 per share with a 0.1% dividend yield.

Lundin Mining Corporation (TSX:LUN)

Lundin is a Toronto-based company with operations in North America, Europe, and Africa. Hudbay attempted to acquire Lundin in 2008. Shares of Lundin increased 28% in 2017.

The company released its third-quarter results on October 25. Sales rose to $601.7 million in comparison to $374.5 million in Q3 2016. Lundin posted net earnings of $156.6 million compared to a net loss of $7.1 million in the prior year. Lundin reported between 199,000 and 209,000 tonnes of copper production, between 20,000 and 23,000 tonnes of nickel, and between 147,000 and 153,000 tonnes of zinc in the quarter.

Capstone Mining Corp. (TSX:CS)

Capstone is a Vancouver-based miner, with its main focus on copper. Its stock has climbed 4.8% in the first two days of trading in 2018. Shares rose 14% in 2017. In the third quarter, Capstone reported revenues of $145.9 million compared to $139.9 million in the third quarter of 2016. The company reported copper production of 22,026 tonnes in the quarter. Capstone is a nice cheap option for investors wanting to jump on the base metals bandwagon as we begin 2018.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any stocks mentioned.

More on Metals and Mining Stocks

tsx today
Metals and Mining Stocks

TSX Today: Why Canadian Stocks Could Fall on Monday, December 4

The commodity market’s heavy losses in early trading could drive the main TSX index downward at the open today.

Read more »

A miner down a mine shaft
Metals and Mining Stocks

2 Top TSX Mining and Materials Stocks to Buy for December 2023

You can buy these two TSX mining stocks in December 2023 to expect market-beating returns in the long run.

Read more »

Watch for the Warning Signs Stock Market Prices Trends 3d Illustration
Dividend Stocks

Where Smart Money is Going as Canadian Interest Rates Climb

The interest rate climb is nearing its end. Smart investors are using this trend to invest in stocks with an…

Read more »

stock market
Metals and Mining Stocks

Time to Invest in Gold? 2 Shining Miners to Watch in 2024

Agnico Eagle Mines (TSX:AEM) and another TSX gold miner that could rise sharply into the new year and beyond!

Read more »

Nuclear power station cooling tower
Metals and Mining Stocks

Cameco Stock Is up 92% This Year: Is it Still a Buy?

Cameco (TSX:CCO) stock could have more room to run, as nuclear power experiences a massive comeback.

Read more »

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Thursday, November 30

The main TSX index remains on track to end November on a strong bullish note, as it has already risen…

Read more »

Gold bars
Metals and Mining Stocks

Are Gold Stocks the Answer to Canada’s Growing Interest Rate Dilemma?

Gold price surged to its six-month high as market expects growing interest rate to ease from next year. How can…

Read more »

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Wednesday, November 29

Mix commodity prices could keep the main TSX index flat at the open today, as investors watch the quarterly U.S.…

Read more »