Commodity stocks could have a chance to add to their strength in 2024 as investors look to consider options beyond just the tech sector. Undoubtedly, tech and artificial intelligence are must-haves for any portfolio aimed at outperforming over the long run.
That said, we must not ignore the value plays that have been left for dust amid last year’s chasing of hot AI stocks. My takeaway? Why not own tech plays in addition to the lesser-loved value plays and commodity producers?
You don’t have to be all-in (or too heavy) on tech to do well. In fact, value may have its moment to shine in 2024 as valuations settle in the hottest corners of tech (think the AI semi stocks). In this piece, we’ll have a closer look at two commodity firms that are not only well-run, but could have the wind to their back as we move further into 2024.
Uranium top dog Cameco (TSX: CCO) and top-tier gold miner Barrick Gold (TSX: ABX) are some of the most enticing stocks to consider if you’re looking to diversify in the worlds of uranium and gold, respectively, two very different metals that could stay robust for years to come.
It’s not just commodity price strength that makes CCO and ABX shares great adds to any portfolio. They make for terrific diversifiers, given uranium, gold, and stock markets may move in vastly different directions on any given day. Indeed, when the market waters get rough, lower correlations to the averages could come in handy and help you smooth the big potholes in the road.
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Cameco
Cameco is a uranium play that really needs no introduction. It’s one of the global leaders in the space that stands to benefit as nations take their nuclear power projects to the next level. Indeed, the nuclear renaissance may be what the world needs to lower its carbon footprint.
Though nuclear energy accompanies its own slate of catastrophic risks, I do think safety procedures have improved greatly over the decades. Perhaps the public may view nuclear energy in a positive light rather than immediately thinking of the Chernobyl or Fukushima disasters.
Over the past year, CCO stock has taken off, surging more than 77%. Though shares recently dipped to close off a terrific 2023, I believe the longer-term momentum is still intact. As such, I’d not be afraid to buy on the way up, given Cameco’s footing in the multi-year nuclear transition.
I hate chasing hot stocks, but I have to make an exception for Cameco. It’s a unique player in the uranium scene, with a generational opportunity to meet growing demand over the next decade and beyond. To me, that justifies a hot run and a higher multiple.
Barrick Gold
Barrick Gold is a shiny gem of a stock as gold prices flirt with new heights. As rates retreat and stocks wobble, I think gold could be headed even higher for 2024. Indeed, it’s hard to avoid the enthusiasm when it comes to the shiny metal these days.
Instead of buying bullion from your local dealer, I prefer shares of ABX. Not only could there be greater upside if gold’s poised for a serious bull run, but the 2.31% dividend yield makes gold (an unproductive asset, so says Warren Buffett) a rather bountiful play as you wait for things to brighten further in the gold markets.
All considered, ABX shares look enticing if you’re looking for gold prices to really explode higher this year (or next).
Better buy: ABX or CCO stock?
I have to go with Cameco stock as the better pick between the two. Uranium prices have been hot of late, but the hot commodity could get even hotter as new reactors go online gradually over the coming years and decades.
