Top 15 Basic Materials Companies With the Strongest Businesses
Marvin's rules picked 15 Basic Materials companies with the highest Business Quality scores. Gold miners, specialty chemical makers and construction materials firms lead, each scored against peers in its own industry.
Basic Materials companies dig up, process or turn raw inputs into products that other industries use. That includes metals, chemicals, fertilizer ingredients and building materials. A strong business here usually means healthy margins, steady cash generation and manageable debt.
This list is ranked by Marvin's Business Quality score, which describes how a company's underlying business compares with others in its industry today. Each pick below shows a few figures, such as margins, growth, return on equity and debt, so you can see what sits behind its score.
Keep in mind that raw-materials businesses can change quickly, and one year of growth is only a snapshot. Some figures are missing for certain companies, and the notes point these out. This is research information, not advice to buy or sell anything.
The list
How Marvin ranked these stocks
Marvin included companies above a minimum size, then ranked the Basic Materials sector by Business Quality score, highest first, with at most four companies per industry. Marvin scores are relative to each company's own industry, so a high score means a company looks strong next to its direct peers, not necessarily next to every company on this list.
Companies above about $300 million in size, ranked by Marvin scores (0-100, relative to each company's own industry). The Basic Materials sector, highest Business Quality score first; at most 4 per industry.
The stocks, one by one
Newmont Corporation NEM
Newmont, a gold company, has a quality score of 97 and a free cash flow margin of 37.8%, meaning a healthy share of revenue becomes spare cash. Debt-to-equity is light at 0.14. Caution: operating margin is not available, so profitability is only partly visible.
AngloGold Ashanti Plc AU
AngloGold Ashanti grew revenue by 70.8% last fiscal year and earned a return on equity of 39.2%, both strong. Debt-to-equity is modest at 0.28. Caution: one year of growth is only a snapshot, and free cash flow margin is not available.
Balchem Corp BCPC
Balchem, a specialty chemicals company, has an operating margin of 20.4% and revenue growth of 8.8%, which points to a profitable, steadily expanding business. Caution: its opportunity score is only 36, and no debt figure is available.
United States Lime & Minerals, Inc. USLM
United States Lime & Minerals has a high operating margin of 42.1% and almost no debt, with debt-to-equity of 0.00. Revenue grew 17.3%. Caution: its opportunity score of 60 is middling next to its quality score.
Barrick Mining Corporation B
Barrick Mining, another gold company, shows a gross margin of 51.3% and revenue growth of 31.2%, with a free cash flow margin of 22.8%. Caution: return on equity of 18.8% is more modest than some peers here, and operating margin is not available.
WD-40 Company WDFC
WD-40 has a gross margin of 55.8% and a return on equity of 32.0%, signs of a very profitable product line. Caution: revenue growth was only 5.0%, and its opportunity score of 51 is low.
Coeur Mining, Inc. CDE
Coeur Mining grew revenue by 96.4% and converted 36.5% of revenue into free cash flow, with an operating margin of 33.8%. Caution: return on equity is a modest 8.2%, and no debt figure is available.
NewMarket Corporation NEU
NewMarket earns an operating margin of 20.0% and a return on equity of 23.6%, which suggest solid profitability. Debt-to-equity is 0.51. Caution: revenue growth was -2.2%, meaning sales shrank slightly last fiscal year.
Southern Copper Corporation SCCO
Southern Copper has a very high operating margin of 56.9% and a return on equity of 45.0%, both among the strongest here. Caution: debt-to-equity of 0.68 is higher than several others on this list.
Simpson Manufacturing Co., Inc. SSD
Simpson Manufacturing has an operating margin of 20.6% and a free cash flow margin of 19.3%, with little debt at 0.19. Caution: revenue growth was a slow 4.5%, and its overall score of 75 is among the lower ones here.
CF Industries Holdings, Inc. CF
CF Industries, an agricultural inputs company, has an operating margin of 41.1% and a return on equity of 43.5%, with revenue growth of 19.3%. Caution: debt-to-equity of 0.63 is higher than several peers on this list.
Ecolab Inc. ECL
Ecolab has a quality score of 88 and an operating margin of 16.9%, showing a dependable, profitable business. Caution: revenue growth was only 2.2%, debt-to-equity of 1.33 is the highest here, and its opportunity score is 21.
NPK International Inc. NPKI
NPK International grew revenue by 27.4% and carries very little debt, with debt-to-equity of 0.05. Caution: return on equity of 11.5% and free cash flow margin of 9.2% are modest compared with others on this list.
Hecla Mining Company HL
Hecla Mining grew revenue by 53.0% and has an operating margin of 44.6%, plus a free cash flow margin of 27.8%. Caution: return on equity is only 12.5%, and no debt figure is available.
CVR Partners, LP UAN
CVR Partners, an agricultural inputs company, has an operating margin of 28.1% and a free cash flow margin of 21.4%, with revenue growth of 15.4%. Caution: return on equity and debt figures are not available, so the picture is incomplete.
Common questions
What does the Business Quality score measure?
It describes how strong a company's underlying business looks compared with other companies in its own industry today. It is not a forecast and not a recommendation.
Why are so many gold and specialty chemical companies on the list?
Marvin ranks by score and allows at most four companies per industry. Gold and specialty chemicals have many companies that score well against their industry peers, so they appear often.
Can I compare scores between different industries?
Only loosely. Scores are relative to each company's own industry, and a gold miner and a chemical maker face very different economics. Check the margins, growth and debt figures for a fuller picture.
Keep reading
- Top 15 Basic Materials Stocks Right Now
- Top 15 Basic Materials Stocks Ranked by Marvin Opportunity Score
- Top 15 Specialty Chemicals Stocks
- Top 15 Construction Materials Stocks by Marvin Score
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Marvin's scores (0-100) compare each company with others in its industry today. Growth and margin figures come from SEC filings. This is general information, not personal investment advice or a recommendation to buy or sell anything. Do your own research.