Investors often overlook the basic materials sector because of the cyclical stock movements. It’s very seldom too that you find growth stocks there. However, the sector got a big lift last week with the unveiling of the Top Performers List known as the TSX 30.
Three basic materials stocks – Trilogy (TSX:TMQ), Ivanhoe (TSX:IVN), and Labrador (TSX:LIF) – made it to the illustrious list. The companies are in the top 11 and were given due recognition for delivering high returns over the last three years.
Growth stock no. 1
Trilogy offer investors exposure to rising cobalt, copper, gold, silver, and zinc prices, plus upside from exploration success and resource expansion. This $297.25 million company ranks fifth on the TSX 30 with a three-year return of 503%.
The company’s focus is the advancing exploration of high-grade cobalt, copper, gold, lead, silver, and zinc properties at the Upper Kobuk Mineral Projects (UKMP) in Northwest Alaska.
Trilogy has a long history of exploration success and resource development. Its focus is to deliver exceptional results to shareholders by developing projects that bring benefits to all stakeholders. As of this writing, the stock is trading at $2.14. This new growth stock is worth watching in the coming months.
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Growth stock no. 2
Canadian mining company Ivanhoe is building three of the world’s best mines and exploring for the next copper giant in the legendary mine fields of South Africa. This $4.0 billion miner has principal and joint-venture projects in South Africa.
Ivanhoe is developing new mines at the Kamoa-Kakula copper discovery and working on the extensive redevelopment and upgrading of the historic Kipushi zinc-copper-germanium-silver mine. Both projects are in the Democratic Republic of Congo (DRC).
Another joint project is the Platreef platinum-palladium-nickel-copper-gold discovery in South Africa. Ivanhoe is also exploring for new copper discoveries on its wholly-owned Western Foreland exploration licences, which is adjacent to the Kamoa-Kakula mining licence.
Analysts covering the stock are forecasting a potential upside of 247% in the next 12 months. Ivanhoe is currently trading at $3.46.
Growth stock no. 3
Toronto-based Labrador is a $1.5 billion company that came about in July 2010 from the conversion of Labrador Iron Ore Royalty Income Fund. It holds a 15.10% equity interest in Iron Ore Company of Canada (IOC) directly and through Hollinger-Hanna Limited, a wholly-owned subsidiary.
IOC operates an iron mine and engages in the production and sale of iron ore pellets and concentrates in North America, Europe, the Middle East, and the Asia-Pacific region. Labrador receives a 7% gross overriding royalty and a 10 cent per tonne commission on all iron ore products produced, sold, and shipped by IOC.
Over the last three years, the company has a total return of 282%, which is enough to land in the 11th spot on the TSX 30. Analysts are recommending a buy rating for the stock. Its current price of $23.01 could jump by 73.83% to $40 in the coming months.
Earn a windfall
The basic materials sector is suddenly alive with three growth stocks leading the charge. Trilogy, Ivanhoe, and Labrador are the top choices in the sector. Retail investors could earn a windfall from these light-on-the-pocket growth stocks.
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 Christopher Liew has no position in any of the stocks mentioned.