2 Top Commodity Stocks to Buy to Combat Inflation

These top Canadian commodity stocks deserve to be on your radar. Here’s why.

| More on:
calculate and analyze stock

Image source: Getty Images

Investors are searching for top Canadian commodity stocks to help protect their savings from the impacts of higher inflation.

Nutrien

Nutrien (TSX:NTR)(NYSE:NTR) is the world’s largest supplier of potash. It is also a leading producer of nitrogen and phosphate. These crop nutrients are used by farmers around the globe to improve yields on their fields.

Potash prices are near their highest levels in a decade. The surge in the price is due to rising demand, as growers take advantage of elevated crop prices to boost acreage. Nutrien sees the strong market conditions continuing through 2022, and the sector could be in the early innings of a multi-year surge.

Nutrien finds itself in an enviable position in the industry. Thanks to heavy capital investments made by Potash Corp and Agrium before they merged in 2018 to become Nutrien, the company has capacity to add supply relatively quickly. Nutrien increased potash output by one million tonnes in the second half of 2021 to fill excess market demand.

Sanctions against major producers Belarus and Russia will drive more demand to Nutrien this year.

Nutrien generated record adjusted EBITDA of US$2.5 billion in Q4 2021 and record full-year adjusted EBITDA of US$7.1 billion. Management used excess cash to reduced debt by US$2.1 billion during the year.

When the results came out the company announced a dividend increase and said it plans to buy back up to 10% of its outstanding stock over the course of the next 12 months.

Nutrien stock trades near $99 per share on the TSX at the time of writing. It wouldn’t be a surprise to see the share price hit $120 by the end of the year.

Barrick Gold

Barrick Gold (TSX:ABX)(NYSE:GOLD) reported strong Q4 2021 results and is poised to have a great start to 2022. The price of gold recently topped US$1,900 per ounce compared to US$1,800 at the beginning of February and could steadily trend higher this year, as investors seek protection against inflation.

Gold is also viewed as a safe-haven asset. The decision by Russia to move its military forces into Ukraine has triggered uncertainty in global financial markets. As the situation plays out, gold demand could pick up momentum.

Barrick Gold raised its base dividend by 11% and will now increase the payout according to the net cash the company has on the balance sheet. Investors could see meaningful payout increases as free cash flow expands with the rise in the price of gold.

Barrick Gold also plans to buy back up to US$1 billion in stock under a new share-repurchase program.

The shares trade near $29 on the TSX at the time of writing. That’s up from $23 earlier this year, but Barrick Gold still looks undervalued. The stock was close to $40 when gold soared to US$2,080 in 2020. The price of gold could easily hit or top that level in the coming months.

The bottom line on top commodity stocks

Nutrien and Barrick Gold are leaders is their respective industries and should generate strong results in 2022. The stocks look attractive right now for investors who want to own companies that tend to benefit in an inflationary environment.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

The Motley Fool recommends Nutrien Ltd. Fool contributor Andrew Walker owns shares of Nutrien.

More on Metals and Mining Stocks

construction workers talk on the job site
Metals and Mining Stocks

2 No-Brainer Mining Stocks to Buy With $200 Right Now

You can buy these top Canadian mining stocks with just a $200 investment right now to start your long-term wealth…

Read more »

Concept of multiple streams of income
Stocks for Beginners

Lock Up This 9.2% Dividend Yield From a Top Royalty Stock

Royalty stocks have a strong advantage when it comes to creating passive income for investors. But this one has the…

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Metals and Mining Stocks

Is First Quantum Minerals Stock a Good Buy Right Now?

First Quantum is a TSX stock that trades 61% below all-time highs. However, the mining stock still trades at a…

Read more »

nugget gold
Metals and Mining Stocks

The Best Gold Stock to Invest $1,000 in Right Now

Here are two of the best Canadian gold stocks that can yield some eye-popping returns in the long run.

Read more »

nugget gold
Stocks for Beginners

The Ultimate Mining Stock to Buy With $1,000 Right Now

This mining stock just saw a drop, but don't let that keep you from diving in. This miner is due…

Read more »

A plant grows from coins.
Metals and Mining Stocks

Canadian Mining Stocks: Buy, Sell, or Hold?

Explore 2025’s top Canadian mining stocks – gold, uranium, and base metals offer big potential in a dynamic, commodity-driven market.

Read more »

farmer holds box of leafy greens
Metals and Mining Stocks

3 Reasons to Buy Nutrien Stock Like There’s No Tomorrow

Nutrien stock has lost 34% of its value just this year alone and looks incredibly cheap today. Yet, secular trends…

Read more »

Canada national flag waving in wind on clear day
Tech Stocks

Trump Trade: Canadian Stocks to Watch

With Trump returning to the presidency, there are some sectors that could boom in Canada, and others to watch. But…

Read more »