The Fed continues to pivot toward the imminent need to combat inflation, which is now running at multi-decade highs.
The upshot is a market rotating from technology growth to hard assets capable of driving near-term results for portfolios in the form of cash on the barrel to start the new year.
For many analysts, the current period is becoming increasingly reminiscent of the market environment we saw in the 1970’s, when commodity stocks ran at the front of the pack due to growth and inflation catalysts.
With that in mind, we take a look below at some of the most interesting players in the commodity space in 2022.
United States Steel Corp. (NYSE:X) engages in the manufacturing and selling of steel products. It operates through its Flat-Rolled Products, U.S. Steel Europe, and Tubular Products segments.
The Flat-Rolled Products segment includes managing steel plants and production facilities that manufacture steel slabs, rounds, strip mill plates, sheets, tin mill, iron ore, and coke. The U.S. Steel Europe segment offers producing and marketing strip mill plates, spiral welded pipe, heating radiators, refractory ceramic materials. The Tubular Products segment involves in manufacturing and trading seamless and electric resistance welded steel casing and tubing, line pipe, and mechanical tubing.
United States Steel Corp. (NYSE:X) recently announced that its next-generation highly sustainable and technologically advanced steel mill will be located in Osceola, Arkansas, close to U. S. Steel’s cutting-edge Big River Steel plant. The facility is engineered to bring together the most advanced technology to create the steel mill of the future that delivers profitable solutions for our customers.
“With this location selected and shovels ready, we are reshaping the future of steelmaking,” said U. S. Steel President and Chief Executive Officer David B. Burritt. “We had numerous competitive site options, but Osceola offers our customers incomparable advantages.”
Even with that news, the action hasn’t really heated up in the stock, with shares moving net sideways over the past week. Shares of the stock have powered higher over the past month, rallying roughly 10% in that time on strong overall action.
United States Steel Corp. (NYSE:X) managed to rope in revenues totaling $6B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 157.4%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($2.1B against $4B, respectively).
Camber Energy Inc (NYSE American:CEI) is a particularly interesting small-cap name in the commodity space that also has strong and growing operations at a smaller scale. The company owns a majority interest in has energy assets located in North America in Kansas, Missouri, Texas, Louisiana, and Mississippi through its subsidiary, Viking Energy Group Inc (OTC US:VKIN).
It has also gained exposure to the carbon capture theme through a recent Exclusive Intellectual Property License Agreement with ESG Clean Energy regarding ESG’s patent rights and know-how related to stationary electric power generation, including methods to utilize heat and capture carbon dioxide. In addition, the stock has been sharply devalued by a potentially suspect “short report” from a bear fund a couple months ago.
Camber Energy Inc. (NYSE American:CEI) most recently announced that on December 31, 2021, an institutional investor purchased 10,544 shares of newly designated convertible preferred stock for a purchase price of $100,000,000.
According to the company’s release, the purchase price was paid by the Investor via payment of $5 million in cash and the execution of four Promissory Notes from the Investor in favor of Company, each in the amount of $23.75 million and payable by the Investor to the Company on March 31, 2022, June 30, 2022, September 30, 2022, and December 31, 2022, respectively.
There are 2,636 shares of Preferred Stock associated with each Note, and the Investor may not convert the shares of preferred stock associated with each Note into common shares or sell any of the underlying common shares unless the Note is paid in full by the Investor. The Company may in its sole discretion redeem the Preferred Stock prior to any Note being paid in full.
Camber Energy Inc. (NYSE American:CEI) CEO, James Doris, noted, “With the funding commitment in place we can confidently pursue new acquisitions and other important value-added initiatives throughout 2022, yet we have the option of redeeming all or a portion of the shares and not accept the funds if we do not believe it is in the best interest of the company to do so at the particular time. The structure was purposely designed to provide the organization with unprecedented optionality. “
Archer Daniels Midland Co. (NYSE:ADM) processes oilseeds, corn, wheat, cocoa and other agricultural commodities. The company operates through its Ag Services and Oilseeds, Carbohydrate Solutions, and Nutrition segments.
The Ag Services and Oilseeds segment includes activities related to the origination, merchandising, crushing, and further processing of oilseeds such as soybeans and soft seeds, such as cottonseed, sunflower seed, canola, rapeseed, and flaxseed into vegetable oils and protein meals. The Carbohydrate Solutions segment engages in corn wet milling and dry milling activities; and also converts corn into sweeteners, starches, and bioproducts. The Nutrition segment provides customer needs for food, beverages, health and wellness, and more.
Archer Daniels Midland Co. (NYSE:ADM) recently announced, in concert with Wolf Carbon Solutions US LLC (Wolf Carbon Solutions), that the companies have signed a Letter of Intent paving the pathway toward further decarbonization of ADM’s footprint via construction of a pipeline – developed, owned and operated by Wolf Carbon Solutions – which, together with a commercial agreement, will allow for the capture, compression and transportation of carbon dioxide produced at ADM’s Clinton and Cedar Rapids, Iowa, facilities.
“This partnership is an excellent example of industries working together to decarbonize and deliver upon their ESG strategies and commitments,” said David Schmunk, President, Wolf Carbon Solutions. “Our organizations offer a great combination of complementary skills and experience — ADM with more than 10 years of experience owning and operating CO2 sequestration wells, and the Wolf Carbon Solutions team with expertise in owning and operating carbon capture facilities and pipeline transportation systems, including North America’s largest third-party CO2 pipeline in Alberta, Canada. We are delighted to share our expertise to further the effort to develop low carbon fuels in the U.S.”
Even with that news, the action hasn’t really heated up in the stock, with shares moving net sideways over the past week. Shares of the stock have powered higher over the past month, rallying roughly 9% in that time on strong overall action.
Archer Daniels Midland Co. (NYSE:ADM) managed to rope in revenues totaling $20.3B in overall sales during the company’s most recently reported quarterly financial data — a figure that represents a rate of top line growth of 34.5%, as compared to year-ago data in comparable terms. In addition, the company is battling some balance sheet hurdles, with cash levels struggling to keep up with current liabilities ($1.1B against $18.6B, respectively).
Other key names involved in the commodities space include Cleveland-Cliffs Inc. (NYSE:CLF), Cameco Corp. (NYSE:CCJ), BHP Group Ltd. ADR (NYSE:BHP), and Alcoa Corp. (NYSE:AA).
