3 precious metals stocks that analysts are targeting higher

When the market offers you favorable price action, you should be careful to understand why certain stocks – or sectors – behave in a certain way. In today’s economic environment, you will find many reasons why SPDR S&P Metals & Mining ETF NYSEARCA: XME has rallied 13% in mining and metals stocks over the past two quarters.

Most investors are stuck in the tech stock mania. This leads them to chase ever higher ceilings with names like NVIDIA NASDAQ:NVDA and other semiconductor names. You can stand out from the crowd and take in some of the best fundamental stories on the market today. One such story involves precious metals stocks, which are prompting Wall Street analysts to give them double-digit upside in the coming months.

Several new developments in the US economy are creating a lot of excitement around names like Wheaton Precious Metals New York Stock Exchange: WPM, Uranium energy NYSE: UECAND MP Materials NYSE: MP. As part of a broader sector that plays to a healthy mix of energy trends, you too can build a portfolio poised to outperform the next cycle.

Ride the wave

When professional traders and investors look for places worthy of their investment capital, they often use a process called “top-down” analysis. Here is a quick summary of this process that you can use to justify your potential investment.

Following the ISM manufacturing PMI data from the last few months, one can see that the primary metals sector is starting to overheat significantly. As a quarterly benchmark, the primary metals industry has produced three consecutive months of expansion data.

Beyond that, these readings suggest an accelerating trend in the industry. Since minerals and metals make up more than a third of U.S. exports, these PMI data could be just the beginning of an even broader trend.

Foreign orders rose 6.4% in February, becoming the main driver of economic expansion in the month. Considering that a significant portion of these export orders will come from metals, it makes sense that new orders will “grow stronger with each passing day and week.” according to the section interviewed in the PMI report.

Analysts at The Goldman Sachs Group Inc. NYSE:GS expected this to happen. Their report on the macroeconomic outlook for 2024 sets the expectation for a turnaround in the manufacturing sector. Now that foreign customers place their export orders, these basic material stocks will take the lead in reaping profits.

Knowing this, you could blindly pick any metal stock and probably come out a winner. But you are here to get the best. By analyzing further, you can find out why these three stocks can be the best choice.

Ready, aim, click

Increased manufacturing activity means a similar boom in oil demand is likely to follow. This may be why Goldman expects a price range of $70 to $100 per barrel again this year. More expensive oil could make stocks like Uranium Energy more attractive as investors look to alternative energy sources like nuclear (reliant on uranium).

It should come as no surprise that analysts see a nearly 40% upside from today’s prices while assigning an $8.8 price target for Uranium Energy. More than that, American international group NYSE:AIG it increased its stake in the stock by 2.4% this month alone.

Now that the Federal Reserve (the Fed) is looking to cut interest rates this year, expected in May according to the FedWatch tool of CME Group Inc. NASDAQ: ECMa lower dollar could attract investors into other precious metals such as gold and silver.

Traders have priced in this potential future, driving gold prices to all-time highs recently. Because of this, analysts expect 87% earnings per share (EPS) growth for MP Materials over the next twelve months, coupled with a share price target of $27.3, suggesting an 80% upside from till today.

Last but not least, Wheaton Precious Metals rides the same tailwinds as metals. Drawing much attention to gold’s growth, this $20 billion giant is set to grow its EPS by up to 12.5% ​​over the next twelve months, an impressive feat for a company of this size.

With a price target of $52.7 today, Wall Street analysts expect the stock to rise 18% from its current position. While it shows fewer upsides than MP Materials, remember that MP is only a $3 billion company. Small-cap stocks typically offer more aggressive upside but also greater volatility.

Before you consider NVIDIA, you’ll want to hear this.

MarketBeat tracks daily Wall Street’s highest-rated and best-performing research analysts and the stocks they recommend to their clients. MarketBeat identified the five stocks that top analysts are quietly whispering to their clients to buy now before the broader market takes hold… and NVIDIA wasn’t on the list.

While NVIDIA currently has a “Moderate Buy” rating among analysts, top-rated analysts believe these five stocks are better buys.

View the five stocks here