Related: Best Basic Materials ETFs
With the economy recovery maturing, the materials sector, which is closely tied to the prices of raw materials, have traditionally done well as inflation rises and late-cycle economic expansions help support demand.
Due to its close ties with the commodities market, the materials sector are susceptible to cyclical demand and volatility in raw material and energy prices. While the sector’s sensitivity to business cycles can expose investors to greater risks, the area may also offer attractive returns during periods of strong growth.
“While spot sheet prices are likely to begin to moderate starting in August, we see structurally higher prices for sheet relative to scrap / global arbitrage than historical levels owing to multiple factors. We have increased target prices on all stocks in our coverage universe except Commercial Metals (CMC) owing to rebar spread risks. We believe the market is underestimating structural change in US sheet market. Our top picks are AK Steel, US Steel, and Steel Dynamics,” according to the Credit Suisse posted by Barron’s.
VanEck Vectors Steel ETF