Opportunities in Basic Materials Limited to Agriculture and Chemicals
Lithium demand took a hit as a result of the pandemic, but we expect it to rebound.
The Morningstar US Basic Materials Index outperformed the broader market during the third quarter by 330 basis points. Year to date, the sector has still underperformed the Morningstar US Market Index by roughly 240 basis points, though this is an improvement from an underperformance of roughly 520 basis points during the first half of the year. Trailing one-year underperformance improved to 380 basis points, down from 530 basis points a quarter ago. As a result of the third-quarter rally, about 30% of the U.S. basic materials stocks we cover now trade in 4- or 5-star territory. However, we think investors can still find attractive long-term opportunities in the sector, particularly in the agriculture and chemicals industries.
U.S. materials index versus the U.S. equity index. - source: Morningstar
Seth Goldstein does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.
Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.
We’d like to share more about how we work and what drives our day-to-day business.
We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.
How we use your information depends on the product and service that you use and your relationship with us. We may use it to:
To learn more about how we handle and protect your data, visit our privacy center.
Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.
To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.
Read our editorial policy to learn more about our process.