Metals and mining stocks have been recovering nicely over the past few months, spurred by investors’ rising interest in precious metals in the face of rising inflation and potential federal spending on infrastructure projects. Hence, investors seeking to capitalize on the rising metal prices should consider betting on mining stocks Vedanta (NYSE:VEDL), Centerra Gold (CGAU), Sierra Metals (NYSE:SMTS), and Jaguar Mining (OTC:JAGGF). They are each still trading at a reasonable price.The metals and mining industry took a hit in the first half of last year as the COVID-19 pandemic halted production and manufacturing around the globe. An improving global economy is now lending support to metal prices because they are an essential part of the industrial sector. Hence, the mining space has already started to recover and now seems poised to grow significantly in the coming months. Notably, the SPDR S&P Metals & Mining ETF (XME) has returned 32.4% so far this year, compared to the broader market S&P 500’s 11.7% gains.
It is true that China is at the forefront of economic growth and commodity consumption. However, the U.S. economy registered 6.4% annual GDP growth in the first-quarter of 2021, and economists at Goldman Sachs (NYSE:GS) expect the U.S. economy to grow 8% in 2021. A resurgence in domestic industrial activities should drive inflation this year, and investors usually scoop up metals and other commodities during inflationary times. Furthermore, President Biden’s ambitious ‘Build Back Better’ infrastructure plan should drive domestic demand for metals and other commodities. This, coupled with global supply chain constraints, should further drive commodity prices north.
With money printing picking up pace globally and the Fed expanding its balance sheet, metals and commodity prices are expected to continue moving higher. So, we think it wise to bet now on affordable metal mining stocks—Vedanta Limited (VEDL), Centerra Gold Inc. (CGAU), Sierra Metals Inc . (SMTS) and Jaguar Mining Inc. (JAGGF)—that are currently trading at reasonable prices. As direct beneficiaries of rising metal prices, these stocks could witness solid upside in the near term.