Advertisement
Canada markets open in 8 hours 14 minutes
  • S&P/TSX

    21,639.10
    -59.00 (-0.27%)
     
  • S&P 500

    5,431.60
    -2.14 (-0.04%)
     
  • DOW

    38,589.16
    -57.94 (-0.15%)
     
  • CAD/USD

    0.7276
    -0.0008 (-0.11%)
     
  • CRUDE OIL

    78.18
    -0.27 (-0.34%)
     
  • Bitcoin CAD

    91,330.45
    +425.38 (+0.47%)
     
  • CMC Crypto 200

    1,407.39
    -10.48 (-0.74%)
     
  • GOLD FUTURES

    2,336.80
    -12.30 (-0.52%)
     
  • RUSSELL 2000

    2,006.16
    -32.75 (-1.61%)
     
  • 10-Yr Bond

    4.2130
    -0.0250 (-0.59%)
     
  • NASDAQ futures

    19,689.25
    +3.75 (+0.02%)
     
  • VOLATILITY

    12.66
    +0.72 (+6.03%)
     
  • FTSE

    8,146.86
    -16.81 (-0.21%)
     
  • NIKKEI 225

    37,973.91
    -840.65 (-2.17%)
     
  • CAD/EUR

    0.6795
    -0.0003 (-0.04%)
     

2 TSX Commodity Stocks With Massive Upside Thanks to Gold Bugs and the Battery Boom

Hand arranging wood block stacking as step stair with arrow up.
Image source: Getty Images

Written by Aditya Raghunath at The Motley Fool Canada

Investing in mining stocks can help you gain exposure to commodities such as gold, silver, copper, and lithium. The performance of mining stocks is tied to the prices of the commodities they mine. So, these companies should deliver outsized gains during periods of economic expansion and trail the markets when sentiment turns bearish.

In this article, I have shortlisted one gold and one lithium mining stock you can consider buying right now. Let’s dive deeper.

Lithium Americas stock

Lithium is an elemental metal used to manufacture batteries. It is a hot commodity that should experience strong demand from the worldwide shift towards electric vehicles. In fact, lithium prices surged roughly 1,000% between the end of 2020 and 2022.

ADVERTISEMENT

However, headwinds such as inflation and rising interest rates have led to sluggish demand for electric vehicles (EVs) globally, leading to a drawdown in lithium prices in the last 18 months. While the oversupply of lithium might weigh heavily on prices in the near term, soaring battery demand from EVs and energy storage solutions should boost demand in the upcoming decade.

Additionally, the Infrastructure Investment and Jobs Act south of the border allocated US$5 billion in federal funding to build EV charging stations. The Inflation Reduction Act was recently put into motion, providing credits for consumers as the U.S. wants EVs to account for 50% of new auto sales by 2030.

In addition, new-age auto manufacturers such as Tesla and Nio and legacy players such as Ford and General Motors are also eying this highly lucrative segment. The EV and battery storage market is expected to expand at an enviable pace, making Lithium Americas (TSX:LAC) a top investment choice right now.

Lithium Americas is an ideal investment for investors with a high-risk appetite. Valued at $883 million by market cap, Lithium Americas is a pre-revenue company, which suggests it is a speculative bet right now. However, it is building lithium extraction sites in South America in partnership with Ganfeng Lithium.

Lithium Americas also completed a feasibility study in Nevada and has already begun construction in the Silver State. Further, Lithium Americas has an offtake agreement for raw lithium with GM.

Analysts remain bullish and expect LAC stock to more than double in the next 12 months.

Barrick Gold stock

Among the largest mining companies globally, Barrick Gold (TSX:ABX) is valued at $30.5 billion by market cap. While gold prices have ticked higher in the last five years, Barrick Gold stock has returned “just” 64% in dividend-adjusted gains since May 2019.

Due to higher commodity prices, Barrick Gold is forecast to increase adjusted earnings from US$0.84 per share in 2023 to US$1.07 per share in 2024 and US$1.37 per share in 2025. Priced at 16.8 times forward earnings, ABX stock is poised for a breakout, especially if gold prices gain pace.

Gold has an inverse relation with interest rates. So, if interest rates are cut by the end of 2024, prices of the precious metal should move higher. Moreover, gold thrives during periods of economic turmoil and diversifies your portfolio.

In addition to its attractive valuation, Barrick Gold pays shareholders an annual dividend of US$0.40 per share, indicating a yield of 2.3%. Analysts tracking ABX stock expect it to surge close to 27% in the next 12 months.

The post 2 TSX Commodity Stocks With Massive Upside Thanks to Gold Bugs and the Battery Boom appeared first on The Motley Fool Canada.

Should you invest $1,000 in Barrick Gold right now?

Before you buy stock in Barrick Gold, consider this:

The Motley Fool Stock Advisor Canada analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Barrick Gold wasn’t one of them. The 10 stocks that made the cut could potentially produce monster returns in the coming years.

Consider MercadoLibre, which we first recommended on January 8, 2014 ... if you invested $1,000 in the “eBay of Latin America” at the time of our recommendation, you’d have $18,271.97!*

Stock Advisor Canada provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month – one from Canada and one from the U.S. The Stock Advisor Canada service has outperformed the return of S&P/TSX Composite Index by 32 percentage points since 2013*.

See the 10 stocks * Returns as of 5/21/24

More reading

Fool contributor Aditya Raghunath has no position in any of the stocks mentioned. The Motley Fool recommends Nio and Tesla. The Motley Fool has a disclosure policy.

2024