It takes constant vigilance to be an investor that is focused on the commodity sector. The prices of raw materials have seen a dramatic increase over the last few years thanks to inflation and the price action on those underlying raw materials is still very volatile.
There was a large move in the price of cocoa not too long ago, but supply and demand trends are bringing that price back down to reality. In the same vein, the price of corn is likely to fall thanks to a new railway in Brazil as more supply is likely to come online. At the same time farmers in the United states will likely shift a lot of their crops to soybeans which could create a new imbalance in that market.
The price of natural gas is a big factor on LNG, and we look at two LNG stocks in this video. Cheniere Energy LNG and Next Decade NEXT are both dependent on the price of natural gas. Both of these stocks could be considered commodity plays.
Another commodity related play could be found in the restaurant stocks. El Polo Loco LOCO is a Zacks Rank #2 (Buy) that is highly dependent on the price of chicken. Chicken costs have soared over the last few years and the company is also facing high labor costs, yet the stock still looks interesting at these levels.
Having a full understanding of the commodity sector is a challenge that most investors leave to a dedicated professional. At Zacks Investment Research that dedicated professional is Jeremy Mullin who heads up the Commodity Innovators service that looks for the best commodity plays and leverages the Zacks Rank to get investors into and out of specific stock ideas. Jeremy gives a detailed write up on Monday and Thursday that covers the commodity market as well as broader stock market information.
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Cheniere Energy, Inc. (LNG) : Free Stock Analysis Report
El Pollo Loco Holdings, Inc. (LOCO) : Free Stock Analysis Report
NextDecade Corporation (NEXT) : Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.