Stocks That Benefit in a Commodity Boom
Inflation has been so hot lately.
Today I’ll walk you through some charts and show you how to find stocks that benefit in a commodity boom.
Earlier this week I sat down at my machine and went through a handful of charts. Most of them were commodity driven. Corn, wheat, soybeans, crude oil and more were at multi-year highs. Clearly, we’re seeing eye-popping levels across the board.
And while these inflationary forces can be headwinds for stocks overall, they are obviously tailwinds for areas sensitive to rising commodity prices. And this has been where the Big Money has been flowing… stocks that benefit in a commodity boom.
Right now, these are the growth areas of the market…in other words, the few places expected to grow sales and earnings in the months ahead.
Right now, having a balanced portfolio with some commodity exposure has been working. Since January, as I’ll show you in a bit, our data has been fully focused on this commodity move.
Now, let’s check on the data.
Big Money Index Rallies to 2-Month High
Two weeks ago, I told you how the stock market selloff was off the charts. March 7th marked the biggest day of stocks sold since the pandemic lows. And as I shared then, markets tend to have big gains a year later.
Well, gains have already begun. Look at the recent rally and how it sent the BMI to a 2-month high:
On the surface that’s a net positive for the market. For years, when the BMI ramped it was mainly driven by Technology and growthier areas of the market.
That isn’t what’s leading this move up. Commodity-driven stocks are getting the juice. One look at GSG (iShares S&P GSCI Commodity Indexed Trust) tells you all you need to know. This fund seeks to track the S&P GSCI Total Return Index. It’s got major green going on:
This move in commodities has been the major theme for MAPsignals in 2022. And since we focus a lot on stocks, let’s check in on those now.
When there’s a major reshuffling in the stock market, our data picks up on it. When crude oil ramps, energy stocks rage. Below you can see all the blue buy signals for our energy stock universe the last 6-months:
It’s practically been non-stop buying. To a lesser extent, Materials firms have been a beacon for upside, too. I noted these themes back in February. They keep cruising higher:
With sky-high prices for metals and fertilizers, some stocks are booming like last year’s growth stocks. And our weekly Top 20 report has been all over this commodity upside since January…and in a very big way. Yes, today I’m going to do a victory lap.
Let’s get to it.
Stocks That Benefit in a Commodity Boom
If you want to know where the Big Money is placing its bets, our weekly Top 20 report is the place to look. This is where you’ll find our highest ranked stocks likely to appreciate in the near-term.
Years of trading on Wall Street taught us that Big Money buying tends to boost stocks for weeks and months. And beginning in January, our data laser-focused on stocks that benefit in a commodity boom.
Below is a screenshot of the Top 20 stock report from January 25th of this year. These are the 20 top-ranked stocks based on our process. Many tickers are in yellow indicating they are new to this report on a 90-day lookback basis. That’s important information.
That means to pay attention because a big shift is likely forming in our data. And it was a big tectonic shift indeed. Most of the new entrants to the report were Energy and Food related:
Source: MAPsignals, FactSet, RBICS
This was the week when a line in the sand was drawn in our data…
This morning I ran the returns of all 20 stocks since January 25th. On average this basket is up double digits, dramatically outperforming the S&P 500. Have a look:
These names gained an average of 15.17% vs an S&P 500 (SPY ETF) gain of 2.46%. That means these stocks crushed the market over 5Xs. That’s the power of following the Big Money. Since that shift hit in January, commodity-focused names have been front and center on this report.
And there’s no arguing with data. That’s been the opportunity. And for that I do have to smile. When there’s been massive pain in other areas of the market, leadership was showcased simply due to one reason: the Big Money.
Here’s the bottom line: The energy and food rally has been here for months. The Big Money has been laser-focused there: stocks that benefit in a commodity boom.
If you’re looking to get access to stocks like this, and market moving shifts…learn more about the MAPsignals process here. Our Top 20 report is available to platinum subscribers… and you get access to every portal module we have.
Look, I believe there’s opportunity in any environment. At some point in the future, there will be another shift to take place. Outliers will again rule the day. My bet is it’ll happen later this year. Until then, stay balanced and always follow the Big Money.
***And we just added a new MAP View module for platinum members which allows you to grade any stock based on the MAPsignals process. That means you can see many fundamental and technical grades on a company. It’s an awesome tool.
If you want to see it in action, check out Jason’s latest video: How to Pick Oversold Stocks to Buy Now for Yourself. He shows off some new portal functionality and how he uses our data to find beaten down opportunities.
Always remember that the process is more important than the picks.
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