Why You Should Buy These 5 Top TSX Metals Stocks in 2020

North American Palladium Ltd. (TSX:PDL) and four other stocks are good value for money and could see steep growth.

pipe metal texture inside

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Commodities are largely undervalued, offering clear opportunities for eagle-eyed investors seeking contrarian opportunities. Growth could abound in the following five metals, so let’s examine an exemplary stock for each one, along with the five persuasive reasons to get invested.

Three metals stocks for energy disruption

It’s no secret that hydrocarbon energy is a rapidly weakening investment thesis. Even perma-bull Jim Cramer has eschewed oil stocks, calling them “tobacco” and stating his inability to make people money with them.

The alternative is green energy, a growing sector that packs sustainable upside with a range of other investment criteria. From value to income, commodities can further an array of portfolio ambitions.

Copper is a play for growth all by itself. But it also scratches the green energy itch. The orange metal is an integral component of the systems used for renewables, as well as a key material used by the electric vehicle industry.

By adding shares in a heavily exposed producer such as Lundin Mining, investors can instantly add growth, passive income (see a dividend yield of 2.4%), and ESG characteristics to a stock portfolio.

Lithium is a high-profile metal used extensively in the electric vehicles industry. Investors eyeing electric vehicle manufacturers, for instance, may want to swap out some auto shares themselves for a pure-play on essential metal stocks.

Lithium Americas satisfies this growth investment thesis, standing out from the crowd with a projected 56% annual growth in earnings. It also boasts appealing fundamentals, such as a P/E of 8 times earnings.

Uranium is an unloved metal and mining pick that brings the promise of nuclear energy upside. A resurgent nuclear industry could see steep capital appreciation in names like Cameco. This is a strategic pick for long-term uranium exposure and could see significant improvement as more reactors come online in the future.

Cameco also boasts a near-perfect balance sheet, which should reassure the long-range shareholder.

Slash portfolio risk while adding growth potential

Gold is a fairly obvious play for low-risk portfolio balancing. Producers of the yellow metal tick a lot of boxes, from the safe-haven asset angle to long-term passive income provision. Additionally, gold stocks suit a range of investment styles, and can even add steep capital gains to a stock portfolio.

For an example of this, look at last year’s TSX 30, which was strongly represented by gold miners whose share prices appreciated steeply in the preceding three-year period. Names to buy for steep momentum include Kirkland Lake Gold, which placed fourth on the inaugural list.

For a big name in mining and a long-term play for dividends, investors should consider buying and holding shares in Kirkland.

Palladium is an often overlooked metal, albeit one that deserves more than a second glance. This metal is used in catalytic converters, for instance, which supports a lower-carbon world and satisfies an ESG investment thesis.

North American Palladium is the clear pure-play stock to buy in this space. Apart from ethical considerations, palladium is an undervalued commodity which could see upside in the coming years.

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 Victoria Hetherington has no position in any of the stocks mentioned.

More on Metals and Mining Stocks

Gold bullion on a chart
Metals and Mining Stocks

Is Barrick Gold (TSX:ABX) a Strong Buy? Profit Surges Almost 19% in Q2 2022

TSX’s top mining stock should be a strong buy in August after the gold miner reported a 19% profit growth…

Read more »

grow dividends
Metals and Mining Stocks

Barrick Gold Stock Looks Primed for Takeoff

Barrick Gold (TSX:ABX)(NYSE:GOLD) stands out to me as a glimmer of value in this choppy market environment.

Read more »

gold stocks gold mining
Metals and Mining Stocks

Agnico Eagle Mines: The Best Gold Stock of the Batch Right Now?

Agnico Eagle Mines (TSX:AEM)(NYSE:AEM) stock looks cheap ahead of a potential relief rally in the price of various precious metals,…

Read more »

TSX Today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Tuesday, August 9

The ongoing corporate earnings season and the U.S. Energy Information Administration’s latest short-term energy outlook report could keep TSX stocks…

Read more »

Hand arranging wood block stacking as step stair with arrow up.
Dividend Stocks

These 3 TSX Stocks Have Doubled Over 3 Years: Can They Do It Again?

Three TSX stocks whose share prices have doubled in three years are well-positioned to repeat history and reward investors with…

Read more »

TSX Today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Monday, August 8

Continued strength in metals prices could help mining stocks on the TSX open slightly higher today.

Read more »

Gold bars
Metals and Mining Stocks

This Imploded Gold Stock Has a Shining Dividend!

Barrick Gold (TSX:ABX)(NYSE:GOLD) is down around 50% from its high, making it a top contrarian pick for those lacking precious…

Read more »

question marks written reminders tickets
Metals and Mining Stocks

Nutrien (TSX:NTR) Stock: Should You Buy Now?

Nutrien just reported record results for the first half of 2022. Is the stock undervalued after the recent selloff?

Read more »