As the economy evolves in 2024, the materials sector might witness a turnaround, boosted by robust supply-demand dynamics. While the sector had a sluggish performance in 2023 amid recession concerns, it could see a positive shift this year.
Fidelity, with a keen eye on areas displaying strong supply-demand dynamics, strategically positioned itself in specific stocks within the sector. The company's picks include Freeport-McMoRan Inc (NYSE: FCX), LyondellBasell Industries NV (NYSE: LYB), Olin Corp (NYSE: OLN), Cabot Corp (NYSE: CBT) and Linde PLC (NYSE: LIN).
Freeport-McMoRan Inc
Freeport-McMoRan stands as one of the world's largest copper suppliers. The company exemplifies an advantageous investment thesis due to challenges faced in copper supply. Aging mines and declining ore quality in significant copper-producing countries such as Chile and Peru suggest a potential rally in copper prices as demand increases. This positions Freeport-McMoRan as a compelling choice within the sector.
LyondellBasell Industries NV
Among U.S. chemical producers, LyondellBasell operates within the commodity chemicals segment. Utilizing natural gas in manufacturing provides cost advantages over European counterparts, likely translating into increased market share and sales growth. LyondellBasell represents a promising pick given its strong position and pricing advantages in the chemical industry.
Olin Corp
Olin, another U.S. chemical manufacturer, benefits from using natural gas in its manufacturing processes. This advantage over European competitors, who predominantly use oil, positions Olin favorably for market expansion and potential sales growth. Olin's strategic advantage in cost efficiency makes it an appealing choice within the materials sector.
Cabot Corp
Similar to its peers in the U.S. chemical industry, Cabot operates within the commodity chemicals sector. The company's reliance on natural gas offers a competitive edge against European rivals, likely leading to enhanced market presence and sales. Cabot emerges as a compelling stock pick given its favorable cost structure and potential for market expansion.
Linde PLC
Linde, an industrial gas company, demonstrates stability through long-term contracts across diverse markets. The company's strategic positioning aligns with global energy transition trends, particularly in carbon capture, indicating a play on evolving environmental dynamics. Linde represents a non-cyclical yet stable choice within the materials sector.
These stock picks within the materials sector showcase promising supply-demand dynamics, making them intriguing investment options for potential gains in 2024.