Don’t sleep on Canada’s top mining stocks as other investors chase what’s hot in the tech scene. Nobody knows how long tech’s run has to go as run into 2024 with a newfound sense of hope and optimism. Sure, rates could be much lower a year from now, but just how much of the lower-rate world is priced into the hottest corners of the tech sector?
Though a 100% repeat of 2022 is highly improbable (it seemed like rates could only climb higher back then), I think the commodity miners (along with other sorts of value plays) could have a chance to outshine high-multiple tech plays again.
Various miners haven’t done too great this year, and as we head into a new year and a clean slate, I’d look for such plays to unearth potential gains (pardon the pun, folks!) for long-term investors.
Nutrien stock has been a major dud this year, with shares slumping another 3.4% on Tuesday’s upbeat market session. Indeed, the agricultural commodity producer is in the midst of one of its cyclical descents. And it’s proven punishing to dip-buyers so far, with shares going for just $71 and change per share at writing. The stock has shed just north of 47% from its 2022 peak, and odds are shares could have further to fall, as negative momentum builds upon itself and investors feel a bit of capitulation.
Nutrien stock may be a falling knife, but if you’re a fan of the space and have the patience to ride things out for a few years, I view Nutrien as a deep-value pick in the mining scene. Nutrien’s potash production advantage could pay dividends once prices sustainably surge higher again. Of course, it’s hard to predict where commodities head in the future, but at these valuations (12 times trailing price-to-earnings), I like the odds and the nearly 4%-yielding dividend.
Cameco is a spicier miner that would appeal more to the high-momentum crowd. Having a look at the chart, you’d swear the firm was somewhere in the tech scene. The uranium miner is up a whopping 291% in the past five years and around 99% year to date.
Many sell-side analysts still believe there’s room to run as the stock breaches new all-time highs above $62 per share. I think they could be right, as the world looks to nuclear energy as a clean means to meet growing power demands.
As long as the world continues to transition toward nuclear power, the sky could be the limit for Cameco stock. As such, the seemingly frothy multiple shouldn’t deter investors keen on gaining exposure to the uranium mining scene.
To me, Cameco stock stands out as one of those stocks that looks quite pricey but may actually be undervalued given the secular tailwinds at its back. I just don’t see industry tailwinds subsiding anytime soon. That makes me a raging bull on CCO stock.