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Rebounding from the pandemic-led economic crisis of 2020, it seems like 2021 is set to be the year of commodities. Not only are the prices of oil and copper rising, but less-popular commodities like barley, tin and cobalt are also reflecting a rally.
So far in 2021, barley surged 64 per cent and traded at US$5.15 a bushel. According to reports, an increase in demand in China caused a surge in barley prices.
Notably, Canada is the fourth largest barley producer in the world and, according to Statistics Canada, the country exported 2.345 million metric tons of barley in 2019-20.
Apart from barley, tin and cobalt were also few of the performers of last week. Tin swelled by 59 per cent to trade at US$15 per pound, while cobalt climbed 41 per cent to trade above C$ 20 per pound.
Since the prices are on the rise, chances are high that investors will show interest in commodity stocks this month. Here are three such stocks you might consider adding to your portfolio in May 2021.
Ag Growth International Inc (TSX:AFN)
A manufacturer of portable and stationary grain-handling equipment, Ag Growth International is a global company that might benefit this year as demand of grains are expected to surge globally.
The company's market cap is about C$ 772 million and its debt-to-equity (D/E) ratio is 3.3. Ag Growth also pays C$ 0.15 as a quarterly dividend and registers a dividend yield of 1.5 per cent, as per TMX.
Since the start of this year, Ag Growth stock swelled by about 38 per cent. Its one-year growth stands at 56 per cent. Ag Growth also clocked a 52-week high of C$ 48.47 on March 18.
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In Q1 2021, Ag Growth posted consolidated trade sales of C$ 256 million, up 12 per cent year-over-year (YoY). In the same period, its adjusted EBITDA grew 52 per cent to C$ 39 million.
Ivanhoe Mines Ltd (TSX:IVN)
The Vancouver-based mineral exploration and development company holds a price-to-book (P/B) ratio of 3.7, as per TMX. In March this year, Ivanhoe Mines completed a US$ 575 million senior notes offering (2.5 per cent convertible), which is expected to help the company to expand its operational facilities.
As per its closing price of C$ 9.04 on Friday, Ivanhoe Mines shares were seven per cent down from a recent 52-week high of C$ 9.78 (May 10, 2021) and 234 per cent up from a 52-week low of C$ 2.7 (May 15, 2020).
The mining scrip also records a one-year growth of 226 per cent and a year-to-date (YTD) growth of about 32 per cent.
In Q1 2021, Ivanhoe Mines said that it is set to produce 200,000 tonnes of copper per year during the Phase 1 stage at Kamoa-Kakula Mine. In Phase 2, it expects to see a double annual copper output.
Sherritt International Corporation (TSX:S)
A cobalt and nickel producer, Sherritt International Corporation stated in its Q1 2021 report that its cobalt production was up by 19 per cent year-over-year (YoY) to 477 tonnes.
Sherritt stock has soared by 96 per cent in the past six months. over the past year, it expanded by 264 per cent to outpace the S&P TSX Diversified Metals & Mining (Sub Industry) Index.
The company offers 9.05 per cent return on equity and 3.8 per cent return on assets, as per TMX.
In first quarter of fiscal 2021, Sherritt’s adjusted EBITDA grew by 602 per cent YoY to C$ 30.2 million, while the combined revenue jumped to C$ 141.7 million.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from an investment point of view.
