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Looking to gain exposure to commodities? One way is through basic materials stocks, although it's important to keep in mind that these stocks are also subject to company risks separate from the prices of their underlying commodities.

We began by screening the basic materials sector for stocks that appear to be undervalued relative to earnings growth, with PEG below 1.

We then screened for those with bullish sentiment from institutional buying, with net positive purchases in the quarter representing at least 5% of share float. This indicates "smart money" investors are bullish on these names' prospects.

For an interactive version of this chart, click on the image below. Average analyst ratings sourced from Zacks Investment Research.

Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis.

1. Peabody Energy Corp. (NYSE:BTU): Engages in the exploration, mining, and production of coal. Market cap at $7.18B, most recent closing price at $26.74. Net institutional purchases in the current quarter at 23.2M shares, which represents about 8.68% of the company's float of 267.26M shares. As of September 30th, 2012, the top 2 holders of the stock are JP Morgan (6.14%), and The Vanguard Group (5.8%). PEG at 0.60.

2. Calumet Specialty Products Partners LP (NASDAQ:CLMT): Produces and sells specialty hydrocarbon products in North America. Market cap at $1.82B, most recent closing price at $31.69. Net institutional purchases in the current quarter at 2.6M shares, which represents about 6.87% of the company's float of 37.87M shares. As of September 29th, 2012, the top 2 holders of the stock are Morgan Stanley (5.2%), and Citigroup (3.56%). PEG at 0.57.

3. Rosetta Resources, Inc. (NASDAQ:ROSE): Engages in the exploration, development, production, and acquisition of onshore oil and gas resources in the United States. Market cap at $2.37B, most recent closing price at $45.11. Net institutional purchases in the current quarter at 2.8M shares, which represents about 5.45% of the company's float of 51.36M shares. As of September 29th, 2012, the top 2 holders of the stock are Jennison Associates (7.25%), and Wellington Management (6.65%). PEG at 0.70.

*Institutional data sourced from Fidelity, all other data sourced from Finviz.

Source: Money Managers Are Buying These 3 Undervalued Materials Stocks