With inflation weighing on the global economy, some investors have been turning their attention to precious metals. The S&P GSCI Precious Metals Index (comprising gold, silver, palladium, and platinum) was up more than 50% from the summer of 2019 to the summer of 2022, although platinum prices have been lagging due to industry oversupply in 2021 and 2022.
Inflation in metal prices has started to cool off as the Federal Reserve Board’s aggressive interest rate hikes have begun to slow down economic activity. However, with demand for electronic and industrial equipment on the rise, prices of materials used in the production of hardware (including platinum) could remain elevated for a long time. That’s why investing in platinum stocks might make sense for some investors.
Top platinum stocks in 2024
Platinum is more than just a precious metal. It also has multiple industrial uses. For example, electric car batteries and some types of fuel cells used in the energy grid, some semiconductors and electrical components, medical devices, and industrial chemical production all use platinum. Investing in companies that mine and refine platinum yields an investment portfolio with some exposure to all of these areas.
Stocks of metal miners can be highly volatile, though. You can also consider a platinum exchange-traded fund (ETF) if buying individual stocks in this space doesn’t hold any allure. But if platinum mining is what you’re after, here are the top three largest producers traded on U.S. stock exchanges:
|Anglo American Platinum (OTC:NGLOY)
|Part of a larger mining conglomerate and responsible for much of the world’s platinum supply.
|Impala Platinum Holdings (OTC:IMPUY)
|Top producer of platinum and palladium in South Africa.
|Sibanye Stillwater (NYSE:SBSW)
|Platinum, palladium, and gold producer with investments in other basic materials operations.
1. Anglo American Platinum
Anglo American Platinum is part of the Anglo American PLC (NGLOY 1.25%) mining conglomerate. The platinum subsidiary is separately listed, although it's majority-owned by Anglo American PLC and based in South Africa. It produces about 40% of the world’s platinum and also produces a little palladium and rhodium (often byproducts of platinum mining).
Anglo American Platinum has noted that global platinum supply was greater than demand in 2021, and that has continued in 2022. However, thanks to its efficient operations and pricing on its refined metals, the company has been reporting record sales and profits for the past few years. Revenue and free cash flow in 2022 are down from their peak in 2021 due to lower pricing on platinum, as well as rolling power blackouts in South Africa.
2. Impala Platinum Holdings
Impala Platinum is the world’s second-largest producer of platinum. Most of its operations are in South Africa and neighboring Zimbabwe, and shares are listed in South Africa, but they can also be traded over the counter in the U.S.
Impala Platinum has offered to acquire a majority stake of fellow platinum producer Royal Bafokeng Platinum (RBPlat). If accepted, Impala Platinum thinks combining RBPlat with its own operations will unlock value for the precious metal producers as the platinum industry consolidates. The company has been acquiring RBPlat shares and now owns more than 40% of total stock outstanding.
Impala Platinum also pays a dividend for investors looking for income. Notably, the company currently has no debt and has ample cash to fund its operations.
3. Sibanye Stillwater
Sibanye Stillwater is another South African mining company and is a top play in platinum and palladium. It’s also a top producer of gold and has interests in lithium mining projects -- both basic materials used in manufacturing electric vehicles and electronics.
Like Anglo American Platinum and Impala Platinum, Sibanye Stillwater has been reporting record revenue and earnings in recent years as demand for precious metals has risen with inflation. Sales and profits in 2022 are also down from their 2021 peak as inflation has cooled. Sibanye Stillwater has also been affected by power outages in South Africa.
The company pays a dividend and has minimal debt and plenty of cash, which is a great position to be in for a capital-intensive business such as mining.
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Invest carefully in platinum stocks
Investing in precious metal producers such as platinum mining stocks is appealing given the inflationary forces ravaging the global economy. However, bear in mind that mining investments are cyclical, and stocks can be incredibly volatile. Their fortunes are highly dependent on the supply and demand of materials they produce. Invest accordingly.
Nevertheless, with the demand for precious metals and other basic materials on the rise, platinum mining stocks are worth a look.