In this piece, we will take a look at the 12 best natural resource stocks to buy. If you want to skip our analysis of the natural resources industry and want to take a look at the top five stocks in this list, head on over to 5 Best Natural Resources Stocks to Buy.
Despite the fact that technology is king these days, humankind is reaching for the stars, and an infinite amount of information is available in the palm of the hand, the simple fact is that natural resources are the dominant factor that has contributed to progress.
The world’s cars run on fossil fuels, computers, and gadgets rely on copper, minerals, and other natural resources, and construction relies on lumber to build a large number of buildings. And even though renewable energy is all the buzz these days, petroleum products are still the go to choice for generating electricity and running airplanes and cars. The world’s infrastructure is dependent on natural resources, and at least for the near term future, they are here to stay.
This need for natural resources became even clearer in 2022 in the aftermath of the Russian invasion of Ukraine. Russia and Ukraine are two integral suppliers of gas, commodities, and other agricultural products. A conflict between the two shook up global supply chains for these valuable products. These effects were felt especially in Europe which had come to rely on cheap Russian gas to keep inflation down and fuel economic growth. The sum of the invasion’s effects on the stock market involved primarily the shares of energy companies soaring at a time when their technology peers tanked. This share price growth also reaped dividends in literal form for investors, with Bloomberg reporting that during the three weeks that ended in September 2022 alone, energy companies paid out a massive $16.4 billion in dividends to mark a 15% sequential growth over the second quarter.
Yet, natural resources also confer countries a predetermined advantage, unlike say innovation, which can surface in any country if the right conditions are in place. This also leaves some countries better off than others, and this dominance remains stable over the course of the years unless dramatic new discoveries are made. Our research of the richest countries in the world in terms of natural resources confirms this fact, as some of the largest countries in the world are also the richest. The top three countries are Russia, the U.S., and Saudi Arabia, with each having copious amounts of minerals, gas, and oil.
Building on this, the natural resources industry is also quite lucrative. One important natural resource industry is the mining sector. Research shows that this sector was worth $1.84 trillion in 2021 and was slated to grow to $2 trillion in 2022 to mark a compounded annual growth rate (CAGR) of 12%. As opposed to some industries where the growth rate slows down over the passage of time, the case is the opposite in the mining industry which is slated to exhibit a CAGR of 12.9% to be worth $3.36 trillion by 2026. Naturally, this makes mining companies quite lucrative, with BHP Group Limited (NYSE:BHP), Rio Tinto Group (NYSE:RIO), and Glencore being the top three most valuable mining companies in the world in terms of market capitalization.
