Looking for help catching some Zs? If you've asked for sleep-aid suggestions, someone may have recommended magnesium. But the mineral's importance -- and the reason it's appearing on investors' radars -- transcends its health benefits.
Found in various metal alloys, such as aluminum and copper, magnesium is an important material in industrial applications. Additionally, magnesium chloride is frequently used in deicing roadways and as a component of fertilizers.
Magnesium plays a critical role in U.S. national security because it's vital to the success of the aerospace, defense, and steelmaking industries, among others. Accordingly, the U.S. Geological Survey has placed it on the 2022 Critical Minerals List. For all these reasons, it's unsurprising that investors looking to fortify their portfolios with a critically important material are searching for magnesium stocks.
The 3 best
3 best magnesium stocks to buy in 2025
Digging into the various metal and materials stocks, investors interested in gaining magnesium exposure will find that there's not a great one-stop option. Although pure-play magnesium stocks are off the table, investors do have other viable options.
| Company | Market Cap | Description |
|---|---|---|
| Compass Minerals (NYSE:CMP) | $376 million | Supplies essential minerals, such as salt, magnesium, and potassium for fertilizer |
| Kaiser Aluminum (NASDAQ:KALU) | $1.1 billion | Produces a variety of aluminum products |
| Luxfer (NYSE:LXFR) | $311 million | A leading manufacturer of aluminum high-pressure gas cylinders and other specialty products using magnesium alloys and carbon composites |
1. Compass Minerals
1. Compass Minerals
Compass Minerals, a producer of various materials, operates two business segments: salt and plant nutrition. In the salt segment, Compass sells sodium chloride and magnesium chloride (both brine and flake) to customers in North America and the U.K. Through the plant nutrition segment, the company sells potash -- a main ingredient in fertilizer for agriculture.
The salt segment accounts for the lion's share of the company's finances. As of 2024, sales in the salt segment have represented 80% of the company's revenue over the past three years.
A winter with unseasonably strong weather contributed to lower revenues in the salt segment for the first half of 2024 (a 12.5% decrease compared to the same period in 2023). However, the company succeeded in mitigating the adverse impact on the financials, expanding the segment's margin.
The salt segment's earnings before interest, taxes, depreciation, and amortization (EBITDA) margin was 25.4% through the first six months of 2024 compared to 22.3% during the first six months of 2023.
While Compass Minerals operates salt production facilities in the United States, Canada, and the U.K., its sole asset that supports magnesium chloride production is in Ogden, Utah. The facility has an annual production capacity of 750,000 tons and an estimated 95 million tons in reserves.
2. Kaiser Aluminum
2. Kaiser Aluminum
Don't let the name fool you. Although aluminum is clearly its focus, magnesium also plays a major role in Kaiser's business. Since its founding in 1946, Kaiser has developed into a leading aluminum manufacturer, with 13 production facilities located across the United States.
In addition to copper, zinc, and silicon, Kaiser uses magnesium to alloy with aluminum, creating products for the various end markets the company serves, including (but not limited to) aerospace, automotive, and food and beverage packaging. The magnesium alloys Kaiser offers are used in a variety of industrial applications.
Besides air-cylinder tubing, the company manufactures a magnesium/silicon alloy well-suited for electrical bus conductors and architectural applications. Another of the company's magnesium alloys is largely used in hydraulic tube applications thanks to its corrosion resistance and good weldability.
Magnesium plays an important role in the company's operations. In 2021, for example, Kaiser faced an unexpected decline in deliveries from a key supplier. This led the company to declare a force majeure at its rolling mill facility in Warrick County, Indiana. Kaiser reduced the production of beverage and food packaging products, though the force majeure has since been lifted.
In 2024, Kaiser Aluminum is recognizing growth toward the bottom of its income statement. Through the first two quarters of the year, Kaiser Aluminum has reported adjusted EBITDA of approximately $116 million, representing an increase of about 5% over the $111 million it reported during the first two quarters of 2023.
Another auspicious sign regarding Kaiser Aluminum's profitability is management's projection that the company's EBITDA margin will rise 50 basis points to 100 points compared to 2023.
In addition to magnesium-minded investors, income investors will find Kaiser alluring. The company has demonstrated a steadfast commitment to rewarding shareholders with a consistently rising dividend. From 2013 to 2023, Kaiser increased its dividend at a compound annual growth rate (CAGR) of almost 10%.
3. Luxfer
3. Luxfer
From fuel for vehicles to air for firefighters, Luxfer is a leading manufacturer of gas cylinders used in multiple applications. In fact, the company brands itself as "the world's largest manufacturer of aluminum high-pressure gas cylinders." While the company's gas cylinders business is considerable -- on average, about 46% of its annual revenue over the past three years -- it's Luxfer's other operating segment, Elektron, where magnesium is a focus.
The company manufactures lightweight, corrosion-resistant, and heat- and flame-resistant magnesium alloys used in several industries, including aerospace, healthcare, and energy. Luxfer also produces magnesium powders suited for the military and emergency relief organizations.
Luxfer conducts its magnesium production at various facilities across the United States and the U.K. The company manufactures magnesium powders in Pennsylvania and New Jersey, magnesium sheets at its Illinois facility, and magnesium alloys at a facility in England.
Over the past three years, Luxfer has achieved strong growth at the top of its income statement. From 2020 to 2023, for example, Luxfer grew sales at a 25% CAGR. Turning to the balance sheet, investors will find that the company is in good financial health, taking a conservative approach to leverage. Management, for example, projects Luxfer will have a net debt-to-EBITDA ratio of 1.5 by the end of 2024.
Although Luxfer cites challenges in industrial markets in the first half of 2024, it believes conditions are improving in the second half of the year. Consequently, management forecasts a slight decline in revenue from 2023 to 2024 but projects 2024 adjusted EBITDA will rise 2% to 11% year over year.
Additionally, the company expects improvements to the cash flow statement. After generating free cash flow of $7.6 million and $16.9 million in 2022 and 2023, respectively, management projects 2024 free cash flow of $21 million to $25 million.
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Right for you?
Are magnesium stocks right for you?
With magnesium playing a critically important role in a diverse range of industries, it's no wonder materials-minded investors are on the lookout for ways to gain exposure to the metal.
Patient investors interested in packaging lithium exposure with their magnesium stock should consider Compass Minerals. Those who want to increase their passive income while picking up a magnesium stock will want to investigate Kaiser Aluminum. People looking for the greatest magnesium exposure will want to take a closer look at Luxfer.
