Screen the sector that mines, refines and processes the inputs to everything else.
Materials covers mining, chemicals, packaging and construction materials — commodity-linked businesses that supply the raw inputs the rest of the economy builds with. Prices for what they produce are set globally and cyclically, so the screen here favours low-cost, well-capitalised producers who can survive a weak part of the cycle rather than those merely riding a commodity high.
Illustrative — not investment advice.
| Ticker | Company | Sub-industry |
|---|---|---|
| LIN | Linde | Industrial gases |
| SHW | Sherwin-Williams | Paints & coatings |
| FCX | Freeport-McMoRan | Copper & gold mining |
| ECL | Ecolab | Water treatment & specialty chemicals |
| NEM | Newmont | Gold mining |
| APD | Air Products and Chemicals | Industrial gases |
| DD | DuPont de Nemours | Specialty chemicals & materials |
| CTVA | Corteva | Agricultural chemicals & seeds |
| NUE | Nucor | Steel production |
| DOW | Dow Inc. | Commodity chemicals |
| PPG | PPG Industries | Paints & coatings |
| VMC | Vulcan Materials | Construction aggregates |
Commodity earnings swing hard with price; free-cash-flow yield measured across a full cycle, not one strong year, tells you which producers are genuinely cheap versus temporarily flush.
In a commodity business, the low-cost producer survives every downturn and the high-cost producer doesn’t; cost position relative to peers is the clearest predictor of who keeps mining or making product when prices fall.
Cyclical revenue collapses fast in a downturn, so a conservative leverage load is what keeps a materials producer solvent through the trough rather than forced into a distressed capital raise.
Materials businesses require constant reinvestment in mines, plants and processing capacity; ROIC shows whether that capital is earning a real return or just maintaining output.
Copper, lithium and other metals used in electric vehicles, batteries and grid infrastructure are seeing structurally higher demand, reshaping which miners get valued as long-term growth stories versus pure cyclicals.
Steel, cement and chemicals producers are investing in lower-carbon production processes, a capital-intensive shift that is starting to separate well-funded incumbents from smaller players who can’t afford the transition.
Miners and chemical producers that got burned by over-expanding into past commodity booms are now prioritising shareholder returns and disciplined capacity additions over chasing volume growth.
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Add a sector filter, then stack valuation, quality, growth and income filters with ≥, ≤ and range operators to match your thesis.
Open any survivor for a DCF you control, then save it to a watchlist with a margin-of-safety target so each name carries an undervalued / fair / rich signal.
Screen for strong free-cash-flow yield measured across a full commodity cycle, a low-cost competitive position, manageable leverage and solid return on invested capital. That favours producers who survive downturns over those merely riding a commodity price spike.
Open any ticker in Lemma Analysis and the DCF is pre-filled from years of financials. Adjust growth, margins and WACC across commodity-price scenarios to see fair value, then run a reverse DCF to see what price is already assumed.
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Commodity prices are set globally and out of any single company’s control, so the producer with the lowest cost per unit is the one that stays profitable when prices fall and captures the most upside when they rise — making relative cost position one of the best predictors of long-run returns in the sector.
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