These companies are leading the way in the mining sector and could make great long-term bets.
Mining stocks are a popular avenue for investors to build out their portfolios because there’s nearly always demand for some type of mined material. Think about it: nearly every product you can buy has some sort of material that needs to be extracted from underground.
And that’s where mining companies come in. Companies in the mining sector extract everything from precious metals (like gold) to energy products (oil and natural gas).
As you can imagine, finding hidden materials beneath the earth isn’t exactly easy, and it involves a significant amount of exploration and processing of the material before you get a final product.
This level of difficulty means that mining companies often spend lots of money finding new claims and setting up operations.
But the long-term potential for them can be well worth the cost. The estimated global mining market size is about $1.85 trillion in 2021 and will grow into a $2.4 trillion market just a few years from now! Yeah, that’s right: trillion.
Instead of digging around to try to find the best mining stocks yourself, take a look at this list for some of the top mining companies in which you can invest!
Best Mining Stocks to Buy
- Barrick Gold
- Franco-Nevada Corp.
- BHP Group Ltd.
- Albemarle Corporation
- Rio Tinto Group
- Wheaton Precious Metals Corp.
- Freeport-McMoRan Inc.
Barrick Gold (NYSE: GOLD)
Price: $16.67 (as of close Aug 12, 2022)
If shiny objects catch your attention, then let me introduce you to Barrick Gold. The company operates one of the largest gold (and copper!) operations in the world and is a relatively safe way for investors to get into the mining industry.
With a market cap of $37.4 billion and more than $5.6 billion in cash, Barrick Gold is a large company that can weather difficult economic times. The company earned $2.3 billion in net earnings and $3.4 billion of free cash flow in 2020.
The company has wisely paid down its debt over the past few years and says it won’t have any significant debt payments until 2033 (I bet they used Dave Ramsey’s debt snowball method).
For investors looking for a massive player in the mining space with a solid balance sheet, Barrick Gold is a strong contender. While the coronavirus pandemic hurt the mining industry, Barrick and other mining stocks could rebound as economies around the world open back up.
Franco-Nevada Corp. (NYSE: FNV)
Price: $132.36 (as of close Aug 12, 2022)
Franco-Nevada is a very different type of mining company, probably because the company isn’t exactly a mining company. Franco-Nevada instead falls into what’s known as the streaming and royalties category.
Instead of mining, the company pays a fee to mining companies for the right to a certain percentage of the mine’s sales, or for the chance to buy future production at a lower price.
The company has agreements with gold mining companies in more than 50 locations around the world—including in Canada, Brazil, Chile, and the United States—and as the price of gold has skyrocketed over the past few years, the company has benefited.
Even as many mines were closed in 2020 because of the pandemic, Franco-Nevada benefited as gold prices surged, reporting record sales of $1 billion for the year.
With no debt and a lucrative streaming business, Franco-Nevada is a smart choice for investors. The company’s share price reflects its leading position, with its stock nearly doubling the S&P 500’s gains over the past three years.
BHP Group Ltd. (NYSE: BHP)
Price: $54.74 (as of close Aug 12, 2022)
BHP Group is a massive company that makes most of its money from mining iron ore and copper but also has mining operations for coal, oil, gas, and more. Some recent rumors have surfaced that the company may exit its oil and gas operations to focus more on its other assets.
The company is known for its low-cost mining thanks to the help of advanced technology that BHP implements into its operations. That’s helped the company not only maintain a strong balance sheet, but also bring in lucrative margins as well.
The company is currently on a multi-year plan to continue reducing its debt and also focusing on returning value to shareholders through share buybacks and dividend payments.
With BHP Group’s focus on building shareholder value, this mining stock should be a strong consideration for investors.
Motley Fool Stock Advisor
Happening Now: Motley Fool is offering 60% off its top stock-picking service for new members
If you're ready to make investing part of your strategy for financial freedom, take a look at The Motley Fool’s flagship investing service, Stock Advisor. They just announced their top 10 “best buys now” across the entire stock market. Whether you’re starting with $100, $500, or more, you should check out the full details.
Albemarle Corporation (NYSE: ALB)
Price: $284.08 (as of close Aug 12, 2022)
Albemarle Corporation is one of the largest U.S. lithium mining companies in the United States and has operations all across the globe. The company makes most of its profit from its lithium mining business and has significant operations for bromine and catalysts as well.
And while the company is diversified across many mining assets, the company’s lithium operations may have the biggest long-term potential.
Electric vehicles (EVs) primarily use lithium-ion batteries for their rechargeable battery packs, and in the next few decades, demand for battery materials is going to soar. That’s because EVs will account for up to 80% of all new vehicles sold worldwide by 2050, according to the research firm IHS Markit.
Albemarle’s management believes that lithium demand will significantly increase between now and 2025, in part because of the rising demand for EVs.
Albemarle’s shares have already performed pretty well over the past three years, nearly doubling the S&P 500’s gains. And as lithium demand increases in the coming years, investors may want to keep a close eye on this mining stock.
Rio Tinto Group (NYSE: RIO)
Price: $58.51 (as of close Aug 12, 2022)
Rio Tinto deserves a spot on this list because the company has its hands in many different mining assets. The company has mining operations all across the globe exploring, mining, and processing iron ore, copper, and aluminum.
And while Rio Tinto is the world’s largest iron ore producer, the company’s operations don’t end there. Rio Tinto also mines everything from boron to salt and titanium to diamonds.
The company’s massive scale gives it an advantage in the mining space by being able to implement efficiencies that smaller mining companies can’t match. That’s helped the company build an impressive financial foundation, including ending 2020 with net debt of less than $1 billion.
Investors will also be happy to know that the company pays a dividend yield of about 5.8%. Additionally, the company paid its biggest dividend payout to investors in nearly 150 years, returning $9 billion to investors.
Wheaton Precious Metals Corp. (NYSE: WPM)
Price: $33.93 (as of close Aug 12, 2022)
Like Franco-Nevada, Wheaton Precious Metals is a streaming play. The Canadian-based company is one of the largest metal streaming companies in the world, focusing on gold, silver, palladium, and cobalt.
The company says that it has agreements with more than 23 mines right now and eight development stage projects. Wheaton reached several key milestones in 2020, including record revenue of more than $1 billion, $765 million in free cash flow, and record dividend distribution of $190 million.
Wheaton’s management said in the company’s 2020 annual report that, “The benefits and value of having a high-quality, geographically diversified portfolio of low-cost assets were especially apparent in 2020.”
And the company’s results have been impressive for investors as well. Over the past three years, Wheaton’s share price has skyrocketed, nearly doubling the results of the S&P 500.
Freeport-McMoRan Inc. (NYSE: FCX)
Price: $30.5 (as of close Aug 12, 2022)
Freeport-McMoRan is a large mining company with operations in Indonesia, North America, and South America. The company is known for its gold mines but also has copper and molybdenum assets as well.
Freeport-McMoRan ended 2020 with revenue slightly down from the previous year, but the company more than doubled its cash flow from the previous year to more than $3 billion.
And management expects more growth in 2021 and beyond. On the company’s fourth-quarter 2020 earnings call, Freeport-McMoRan CFO Kathleen Quirk said that copper sales should grow 20% and gold production is projected to be 50% higher compared to 2020 levels.
Freeport-McMoRan has been a fantastic stock for investors over the past three years, even as the coronavirus pandemic slowed down production in 2020, and has returned about 120%, compared to the S&P 500’s 55% returns.
Invest in Many Mining Stocks All at Once with ETFs
If you’re interested in mining stocks but you don’t want to dig deep into all of the mining stocks listed on Wall Street or keep up with a company’s quarterly earnings to see if they’re on the right track, then investing in a mining exchange-traded fund (ETF) may be a better choice for you.
Because there are many different types of mining companies listed on the stock market, there are a lot of mining ETFs from which to choose. If you’re interested in precious metals, the benchmark SPDR S&P Metals & Mining ETF (XME) may be a good choice.
Additionally, you can buy a basket of gold mining stocks with the SPDR Gold Trust (GLD) or through the VanEck Vectors Gold Miners ETF (GDX), which invests in gold mining companies.
Additionally, investors can tap into copper mines with the Global X Copper Miners ETF (COPX), which aims to follow the Solactive Global Copper Miners Index. And if you’re into silver stocks, then check out the iShares MSCI Global Silver and Metals Miners (SLVP).
Frequently Asked Questions
Are mining stocks a good investment?
Some mining stocks can make very good investments, but that doesn’t mean it’ll always be a bull market for mining stocks. If you’re interested in buying a mining stock, make sure that you analyze the company’s financial performance, how much debt it has, how diversified its mining assets are, and how well the company is managed.
What are the best mining stocks?
Many of the companies on this list could be good long-term mining investments. But the top two performing mining stocks from this list are Freeport-McMoRan Inc. and Wheaton Precious Metals Corp., which have gained 119% and 108% respectively over the past three years.
How many gold mining stocks are there?
According to Gold.org, there are more than 300 publicly traded gold companies. Investors should remember that not all gold stocks will benefit from the price of gold in the same way. Investors should research each company they invest in to ensure that the company is financially stable, managed well, and has a lot of long-term growth potential.