Are you looking to boost your portfolio exposure to the mining industry in 2013? Here are three companies with 5-Star CAPS ratings that deserve a deeper look. All three should benefit from long-term market demands which has each poised to outperform in 2013.
The nuclear option
While many of the world's developing economies are shunning nuclear power in the wake of the Fukushima disaster, the emerging world is harnessing its power. Still, the negativity toward nuclear power has sent uranium prices plummeting. This weak price environment has caused many miners to abandon expansion projects, which will keep a lid on future supply gains.
One company that's positioned to benefit from an eventual recovery in uranium prices is Cameco (NYSE: CCJ ) . The company is the lowest cost producer of the element and is about to get a major production boost as its Cigar Lake project starts to come online by the end of the year. Also, Cameco is a primary supplier of uranium to China under a contract that runs through 2025. Cameco is very well-positioned to profit from growing emerging market demand for uranium; its shares should get a boost as Cigar Lake comes online later this year.
Feeding a hungry world
When you combine a growing global population with less available arable land for growing food for everyone, you have a problem. To combat this problem, farmers are turning to solutions that will improve crop yields. That equation should yield increased profits for low-cost fertilizer producer PotashCorp (NYSE: POT ) .
Earlier this month fellow potash producer Mosaic (NYSE: MOS ) reported strong earnings and was seeing strong demand for its products. The company also noted that over the longer term, both economic and demographic trends were extremely promising. These same trends should have an even more positive effect on PotashCorp's results this year as the company's low cost structure yields better margins.
A golden opportunity?
Thompson Creek Metals (NYSE: TC ) is best known as a producer of molybdenum. However, the company is in the final stages of bringing its Mount Milligan copper and gold mine into production. The mine is expected to produce an average of 194,000 ounces of gold and 81 million pounds of copper each year over its 22-year expected life.
The project has not gone as smoothly as the company had hoped. Construction costs have skyrocketed and the company has had to give up half of the mine's future gold production to help fund the project's completion. That being said, the mine has the potential to transform the company into a top performer. A further boost for the company in the next year would be a rebound in the price of molybdenum, which suffered a double-digit decline last year.
In the near term, Thompson Creek Metals has the biggest catalyst on the horizon. I'm joining the CAPS bulls and giving the company the thumbs-up. However, looking out into the future, PotashCorp looks to be the big winner of this group. The company's low-cost production and high barriers to entry should yield strong future results.
With less and less arable land available around the world, increasing yields from existing plots will become vitally important to keep up with expected population growth. Cheap and effective fertilizers could be the key to achieving this goal. As the global leader in potash production, PotashCorp has several barriers to entry established that make it nearly impossible for competition to break through. Click here now to access The Motley Fool's new premium research report on PotashCorp, in which we cover precisely what these barriers to entry are and detail several other key reasons why this company presents such a compelling investment opportunity today.