The elemental metal nickel is a hot commodity. As with other materials used in manufacturing, nickel prices have been up sharply during the pandemic. Prices are down from their all-time highs in early 2022, but they have still almost doubled since the start of 2019.
With nickel in high demand in various sectors of the global economy and materials in short supply, nickel mining stocks are worth a look right now.
Investing in nickel stocks
Investing in nickel stocks
Nickel is a widely used metal in the manufacturing world. It’s a primary ingredient in stainless steel and is prized for its resistance to corrosion. Nickel is also one of the most abundant resources.
Demand is on the rise as nickel is put to ample use in the semiconductor industry. One of the highest-growth areas for this common elemental metal is in electric vehicles (EVs). EV batteries need almost pure nickel in the manufacture of cathodes (the negatively charged part of a battery). With EV production rapidly on the rise, nickel could be a top commodity investment during the next decade.
Investing in nickel stocks can be tricky, though. Mining businesses are cyclical, and stock prices can ebb and flow along with the market price for nickel. Russia’s invasion of Ukraine has also put pressure on global supplies of nickel and other commodities. Investing in a basket of nickel stocks could be advisable.
With that in mind, here are five nickel stocks to consider for 2023:
| Company | Market Capitalization | Description |
|---|---|---|
| BHP Group (NYSE:BHP) | $147 billion | One of the world’s largest mining conglomerates and based in Australia. |
| Glencore (OTC:GLNCY) | $68 billion | A top nickel producer that is diversified across energy and other base materials. |
| Vale (NYSE:VALE) | $62 billion | Brazil-based conglomerate and the world’s largest producer of nickel. |
| Anglo American (OTC:NGLOY) | $39 billion | A precious metals and diamond producer that also supplies significant amounts of nickel. |
| South32 (OTC:SOUHY) | $12 billion | Small metal mining company in Australia that has some nickel mining assets. |
1. BHP Group
1. BHP Group
A list of the world’s top metal mining companies wouldn’t be complete without including BHP Group. This is one of the largest base materials producers around, including a massive nickel extraction and refining operation, so BHP Group is a good place to start a search for nickel stocks.
BHP Group has several mines and refineries in Australia (the company’s home turf). The company historically generates operating profit margins topping 30%, which it uses to develop new projects and pay shareholders a cyclical but growing dividend.
2. Glencore
2. Glencore
Switzerland-based Glencore is another global mining giant. It’s involved with energy production, recycling, agricultural products, and mining assets. Its operations include copper and cobalt mines (another resource used in EV batteries) and, of course, nickel. Glencore boasts of being one of the world’s top producers of nickel, with mines in Canada, Europe, and Australia.
For investors in the United States, bear in mind that Glencore is not directly listed on a U.S. stock exchange. Glencore is listed on the London Stock Exchange, but shares can be purchased in the U.S. over the counter (OTC). There are certain risks involved in owning shares of a company like this. Keep in mind that Glencore has not generated the same lofty profit margins as peers such as BHP, and the dividend hasn’t grown all that much over the past decade.
3. Vale
3. Vale
Vale is a Brazil-based mining conglomerate and one of the top metal miners. Nickel is one of Vale’s specialties. The company claims it’s the largest producer of nickel -- passing Russia’s Norilsk Nickel (OTC:NILSY), which is currently dealing with sanctions related to the invasion of Ukraine.
Vale has a long history as a top supplier, transporter, and refiner of metals such as nickel. For investors looking for exposure to this key ingredient in manufacturing and technology, its stock is worth considering. Vale is a cyclical business, but it generates healthy profit margins that are used to pay a dividend and repurchase stock to boost shareholder value.
4. Anglo American
4. Anglo American
U.K.-based Anglo American is another large mining conglomerate. Some of its operations are best known for platinum production, another industrial metal. Diamonds are also a top source of revenue for the company. But substantial nickel mining and refining operations that serve the global stainless steel market are among Anglo American’s assets.
Anglo American’s nickel sites are located in Brazil. As base material prices have risen in recent years, the company’s revenue and earnings before interest, taxes, depreciation, and amortization (EBITDA) margins have sharply increased, as well (they exceeded 40% in both 2021 and 2022). As a result, Anglo American has boosted its dividend payout to shareholders and is another top stock for investors seeking exposure to nickel.
5. South32
5. South32
By far the smallest stock on this list, Australian-based South32 is another top nickel producer. The company also has mines that produce aluminum, zinc, lead, silver, and more. The company was spun off from former parent BHP Group in 2015.
Although small and with limited stand-alone operating history, South32 has done well. The company is profitable and pays a dividend. It also has plenty of cash and investments and minimal debt on its balance sheet, making it a solid stock for investors looking for a smaller company with expansion potential.
Related investing topics
Nickel mining stocks are cyclical
Nickel mining stocks are cyclical
There is a lot of promise for nickel stocks with the metal’s use in semiconductors, EV batteries, and other technology advances in the decade ahead. But bear in mind this is a highly cyclical sector of the economy. Commodity prices are sensitive to supply and demand, and mining stock prices can be incredibly volatile and unpredictable.
Even so, demand for nickel and other metals isn’t going away. For investors who want to bet on base materials used in today’s leading tech and get dividends along the way, there’s a lot to like about nickel stocks right now.
