3 Stocks to Diversify Your Metal Portfolio

Diversification is more than just about spreading the risk. You can also stagger short-term growth cycles by choosing the right assets, often within the same commodity.

| More on:
edit Businessman using calculator next to laptop

Image source: Getty Images.

If you are interested in commodities, metals are an exciting avenue. Not only are metal markets very different from energy (the choice commodity for most investors), but they also offer robust diversification within the asset class.

And if diversification in metal holdings is what you are after, there are three stocks that should be on your radar.

A gold stock

Gold is the most common metal holding — not only because the TSX has a substantial collection of gold stocks but also because it’s a powerful contrarian investment that can perform well in a poor market. Therefore, a stock like Equinox Gold (TSX:EQX)(NYSE:EQX) might be worth a spot in your portfolio.

This Vancouver-based company has only been around since 2007, and the stock is even fresher. It’s a mid-cap company that’s currently available at a massive 58% discount from its 2020 peak. It can more than double your investment just by hitting that peak again, which might not be too unlikely a scenario, considering how the market has been falling lately.

One of the ways this company stands out compared to other gold miners is that its entire operational base is in the Americas. Being closer to home promises slightly more stability and better control.

An iron stock

Iron can be a solid addition to your portfolio because its chief use — i.e., steel — is almost always in demand. And when you are interested in investing in iron in Canada, Champion Iron (TSX:CIA) is one of the top choices. The company is headquartered in Australia but cross-listed in Canada because of its Canadian asset base.

All three of the company’s flagship projects are in Canada — two in Quebec and the third in Newfoundland and Labrador.

The stock has mostly gone up since its inception in 2014, and growth since then has been phenomenal – 1,125%. In the last five years alone, the stock has gone through multiple growth phases, appreciating over or near 100% four times. So, if you buy this metal stock at a dip and wait, you are highly likely to double your capital at least twice in the next five years.

A uranium stock

Even though uranium stocks are usually classified as energy, it’s still metal, making Cameco (TSX:CCO)(NYSE:CCJ), one of the largest uranium companies in the world, a metal holding. Uranium is a precious resource with a default state of more demand than supply. And if more nuclear power plants start coming online for green electricity (which is still a matter of some debate), the demand will rise up exponentially.

As a uranium-rich country, Canada offers the home-ground advantage of companies like Cameco. The Cameco stock was in a rut, steadily going down for most of the last decade, but it has been on the rise since the pandemic. And if it continues upward, you may benefit from the growth offered by the bullish phase of this uranium metal holding.

Foolish takeaway

Metals are quite a diverse stock market sector in Canada, and there are several other options besides these three stocks. And now, with the advent of EVs, metals like nickel, cobalt, and lithium are also getting the limelight. This gives investors even more options for a rich metal portfolio.

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 Adam Othman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned.

More on Metals and Mining Stocks

Nuclear power station cooling tower
Metals and Mining Stocks

Dividends From the Deep: Can Cameco’s Uranium Resurgence Boost Payouts?

Cameco (TSX:CCO) stock pays a dividend. Could the recent rise in uranium prices take it higher?

Read more »

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Wednesday, December 6

Falling commodity prices could weigh on TSX stocks today, as investors await the Bank of Canada’s interest rate decision.

Read more »

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 »