9 Undervalued Basic Materials Stocks Being Bought Up By Hedge Funds

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 |  Includes: BBG, CJES, CRR, GPOR, MCPIQ, NR, NSU, REN, SPN
by: Kapitall

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

For a closer look at the basic materials sector, we ran a screen. We began by screening US-traded basic materials stocks for those that appear undervalued relative to earnings growth, with PEG below 1.

We then screened these names for those with bullish sentiment from institutional investors, with significant net institutional purchases over the last quarter representing at least 5% of share float. This indicates that institutional investors such as hedge fund managers and mutual fund managers expect these names to outperform.

Interactive Chart: Press Play to compare changes in market cap over the last two years for six of the stocks mentioned below. Analyst ratings sourced from Zacks Investment Research.

We also created a price-weighted index of the stocks mentioned below, and monitored the performance of the list relative to the S&P 500 index over the last month. To access a complete analysis of this list's recent performance, click here.

Do you think hedge funds are calling it right on these names? Use this list as a starting point for your own analysis.

List sorted by net institutional purchases over the last quarter as a percent of share float.

1. Nevsun Resources Ltd. (NYSEMKT:NSU): Engages in the acquisition, exploration, development, and production of mineral properties. Market cap at $647.52M, most recent closing price at $3.40. PEG at 0.34. Net institutional purchases in the current quarter at 41.7M shares, which represents about 21.1% of the company's float of 197.61M shares.

2. C&J Energy Services, Inc. (NYSE:CJES): Provides specialty equipment services for oil and natural gas exploration and production companies in the Texas, Louisiana, and Oklahoma regions of the United States. Market cap at $951.2M, most recent closing price at $17.76. PEG at 0.3. Net institutional purchases in the current quarter at 9.0M shares, which represents about 25.08% of the company's float of 35.88M shares.

3. Molycorp, Inc. (MCP): Focuses on the production and sale of rare earth oxides from stockpiled feedstocks in the western hemisphere. Market cap at $2.1B, most recent closing price at $24.82. PEG at 0.66. Net institutional purchases in the current quarter at 10.8M shares, which represents about 21.89% of the company's float of 49.33M shares.

4. Superior Energy Services, Inc. (NYSE:SPN): Provides specialized oilfield services and equipment to serve the production and drilling related needs of oil and gas companies. Market cap at $1.92B, most recent closing price at $23.68. PEG at 0.28. Net institutional purchases in the current quarter at 14.9M shares, which represents about 11.98% of the company's float of 124.40M shares.

5. CARBO Ceramics Inc. (NYSE:CRR): Manufactures and supplies ceramic proppants primarily used in the hydraulic fracturing of natural gas and oil wells in the United States and internationally. Market cap at $1.91B, most recent closing price at $82.08. PEG at 0.42. Net institutional purchases in the current quarter at 1.9M shares, which represents about 9.63% of the company's float of 19.73M shares.

6. Resolute Energy Corporation (NYSE:REN): Engages in the acquisition, exploration, exploitation, and development of oil and gas properties primarily in onshore properties in the United States. Market cap at $601.9M, most recent closing price at $9.62. PEG at 0.78. Net institutional purchases in the current quarter at 3.1M shares, which represents about 8.06% of the company's float of 38.46M shares.

7. Bill Barrett Corp. (NYSE:BBG): Engages in the exploration, development, and production of natural gas and crude oil principally in the Rocky Mountain region of the United States. Market cap at $1.1B, most recent closing price at $21.90. PEG at 0.85. Net institutional purchases in the current quarter at 3.4M shares, which represents about 7.32% of the company's float of 46.42M shares.

8. Gulfport Energy Corp. (NASDAQ:GPOR): Develops, and produces oil and gas in the Louisiana Gulf Coast. Market cap at $1.29B, most recent closing price at $20.28. PEG at 0.22. Net institutional purchases in the current quarter at 2.7M shares, which represents about 5.46% of the company's float of 49.41M shares.

9. Newpark Resources Inc. (NYSE:NR): Provides fluids management, waste disposal, and well site preparation products and services primarily to the oil and gas exploration and production industry. Market cap at $571.76M, most recent closing price at $6.22. PEG at 0.73. Net institutional purchases in the current quarter at 4.5M shares, which represents about 5.01% of the company's float of 89.90M shares.

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

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