The 7 Worst Performing Large Cap Commodity Stocks

by: Rash Menaria

Here are the seven worst performing large cap commodity stocks based on year to date returns.




YTD Returns


Gerdau S.A.

Steel & Iron



Arcelor Mittal

Steel & Iron



Southern Copper Corp.




Companhia Siderurgica Nacional

Steel & Iron



Sterlite Industries (India) Ltd.




Teck Resources Limited

Industrial Metals & Minerals



Tenaris SA

Steel & Iron


I am a commodity bull and I don’t see a repeat of a 2008 commodity crash if we enter a recession. Given the amount of liquidity a Fed has injected in the system by its money-printing binge, I believe that commodity stocks will stabilize at elevated levels. I was looking at a list to find beaten down opportunities in a commodity sector and one stock which really stands out is Arcelor Mittal.

ArcelorMittal is a global steel producer. It produces a range of finished and semi-finished products. The company operates in five segments: Flat carbon Americas; flat carbon Europe; long carbon Americas and Europe; Asia, Africa and commonwealth of independent states; and distribution solutions.

Six analysts covering the stock have a median target price of $37.50 for the stock vs. the current market price of $19.77.

There are some near term challenges for ArcelorMittal from the expected slowdown in European automotive production in Q3, a likely pause in re-stocking and the consequent risk of falling spot prices. However, the company is trading at a forward PE of just 5.25 and I believe at these valuations most of the negatives are already priced into the stock.

ArcelorMittal is a global leader in the steel industry, with a market share of ~9% and significant backward integration into iron ore and coking coal. The company is trading around its 2009 lows despite the fact that it has a stronger business model (more integration into raw materials than 2009 and better configuration of a plant) and a far better balance sheet, with lower duration risk on debt and less strict covenants. I believe ArcelorMittal is a good value buy at current price for medium to long term duration.

For other companies on the above list, here are some of the basics about their businesses and analyst opinions on them.

Gerdau S.A. is a producer of long rolled steel. Gerdau operates steel mills that produce steel by direct iron-ore reduction in blast furnaces and in electric arc furnaces. Out of eight analysts covering the company, six have buy ratings and two have hold ratings.

Southern Copper Corporation is an integrated copper producer. SCC produces copper, molybdenum, zinc and silver. All of the company's mining, smelting and refining facilities are located in Peru and in Mexico, and it conducts exploration activities in those countries and Chile. Out of 16 analysts covering the company, eight have buy ratings, six have hold ratings and two have sell ratings.

Companhia Siderurgica Nacional is an integrated steel producer in Brazil and Latin America. The company focuses on mining, steel production, logistics, cement and energy. In its mining operations, CSN extracts iron ore, dolomite and limestone from its mines, in addition to producing tin. The steel manufacturing facilities produce a range of steel products, including several types of corrosion-resistant galvanized steel products, tin plates, flat steel and long steel. Out of 10 analysts covering the company, three have buy ratings, four have hold ratings and three have sell ratings.

Sterlite Industries (India) Limited is a metals and mining company. The company operates in three segments: Copper, phosphoric acid and other business segment. The company’s principal operations are located in India, Australia, the United Arab Emirates, Namibia, South Africa and Ireland. One analyst covers the company and has a buy rating.

Teck Resources Limited is engaged in exploring for, developing and producing natural resources. The company’s activities are organized into business units focused on copper, coal, zinc and energy. Out of nine analysts covering the company, eight have buy ratings and one has a hold rating.

Tenaris SA is a holding company engaged in the business of manufacturing of steel pipe and distributing operations. The company operates in two business segments: Tubes and projects. The tubes segment includes the operations that consist of the production and selling of both seamless and welded steel tubular products and related services mainly for energy and industrial applications. The projects segment includes the operations that consist of the production and selling of welded steel pipe products mainly used in the construction of major pipeline projects. Out of 18 analysts covering the company, nine have buy ratings and nine have hold ratings.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.