Top 3 Stocks for the Ongoing Commodity Boom

Commodity stocks like Lithium Americas Corp. (TSX:LAC)(NYSE:LAC) could see significant upside ahead.

A person looks at data on a screen

Image source: Getty Images

The commodity market hinges on simple supply-demand dynamics. Over the past decade, we’ve underinvested in production which has limited our supply of essential commodities. Meanwhile, demand is sky high and likely to surge further. 

Some analysts believe the commodity boom could last several years — a supercycle. If this is the case, investors might want to add some exposure to the best commodity stocks on the market. Here are the top three that should be on your radar in 2022. 

Lithium

Lithium is a critical element in the world’s most important energy product: batteries. Lithium-ion batteries are ubiquitous in all our devices, but there’s a wave of new demand from the ongoing transition to electric vehicles. 

In fact, demand has surged so rapidly that lithium producers have struggled to keep up. The current method of lithium extraction is simply too slow to meet global demand for EV production. That’s why lithium prices have surged 700% since the start of 2021. 

This unprecedented bull market is a major tailwind for producers like Lithium Americas (TSX:LAC)(NYSE:LAC). The company doesn’t currently produce lithium but has control over three mining sites that could be operational as soon as this year. If the price of this commodity remains elevated and production starts on schedule, the stock could surge. 

Copper

Copper is another critical component of electric vehicles. In fact, most traditional internal combustion engine vehicles also use copper in their wiring harnesses. The transition to EVs greatly increases demand for this commodity. 

Unfortunately, the sector hasn’t attracted enough capital over the past decade. There are very few producers with limited capacity, which is creating a shortage. Copper prices have surged 125% from their March 2020 lows. 

Mining giant Teck Resources (TSX:TECK.B)(NYSE:TECK) has considerable exposure to copper. In fact, the company’s four mines contribute roughly 34% of its gross annual income right now. Unsurprisingly, the stock is up 90% over the past 12 months. If the supply crunch continues, Teck stock could see further upside ahead.  

Oil

The oil rally is, perhaps, the most noteworthy. Two years ago, producers were willing to pay to have barrels taken away. Now, the pendulum has swung to the other end, and we face an energy crisis

A barrel of oil is trading well above $100. Most Canadian oil producers need just $70 to produce handsome cash flows. Put simply, oil stocks are in a strong position. 

Canadian Natural Resources (TSX:CNQ)(NYSE:CNQ) is the biggest oil and gas producer in the country. The stock is up 714% since 2020 lows. It’s still trading at a price-to-earnings ratio of just 10.8. If the price of oil remains elevated or surges further, this company could significantly boost its buybacks and dividends. 

The stock already offers a 3.4% dividend yield. With more cash flow ahead, this could be the perfect opportunity for investors seeking secure passive income over the long term. Keep a close eye on this opportunity. 

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.

Fool contributor Vishesh Raisinghani has no position in any of the stocks mentioned. The Motley Fool recommends CDN NATURAL RES.

More on Metals and Mining Stocks

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 »

Super sized rock trucks take a load of platinum rich rock into the crusher.
Metals and Mining Stocks

Invest $7,000 in This Dividend Stock for $672 in Passive Income

High yield can be an essential requirement when you need to start even a modestly sized passive income with a…

Read more »