10 Best Basic Materials Moat Stocks for February 2026
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Market Overview & Selection Criteria
The basic materials sector has shown resilience amid volatile commodity prices, with gold and metals miners delivering exceptional 1-year returns up to 301.2% based on ValueSense analysis. These top 10 basic materials stock picks were selected using ValueSense's proprietary methodology, prioritizing high Quality ratings (6.3-8.3), strong intrinsic value estimates suggesting undervaluation, robust ROIC (17.9%-103.7%), healthy FCF margins (12.6%-65.1%), and impressive 1Y returns averaging over 100% for most. Stocks span diversified mining operations in copper, gold, and specialty materials, filtered for low-to-moderate Total Debt to Equity ratios (0.0%-66.0%) and positive free cash flow generation where applicable. This stock watchlist emphasizes companies with gross margins above 40% and revenue growth potential, ideal for value-oriented portfolios seeking undervalued stocks to buy in commodities.
Featured Stock Analysis
Stock #1: BHP Group Limited (BHP)
| Metric | Value |
|---|---|
| Market Cap | $175.7B |
| Quality Rating | 6.6 |
| Intrinsic Value | $65.8 |
| 1Y Return | 40.9% |
| Revenue | $107.3B |
| Free Cash Flow | $20.7B |
| Revenue Growth | (10.1%) |
| FCF margin | 19.3% |
| Gross margin | 48.7% |
| ROIC | 28.5% |
| Total Debt to Equity | 46.9% |
Investment Thesis
BHP Group Limited (BHP), a global mining giant, stands out with a Market Cap of $175.7B and Quality rating of 6.6 from ValueSense. Its intrinsic value of $65.8 highlights potential undervaluation, supported by massive scale in Revenue of $107.3B and Free Cash Flow of $20.7B. Despite a Revenue growth dip to 10.1%, the company maintains solid profitability with FCF margin at 19.3%, Gross margin of 48.7%, and exceptional ROIC of 28.5%. Total Debt to Equity at 46.9% reflects manageable leverage for a firm of its size, positioning BHP as a stable anchor in basic materials stock picks with a 1Y Return of 40.9%. This analysis reveals BHP's diversified commodity exposure as a key strength for long-term value in volatile markets.
Key Catalysts
- Scale advantages driving $107.3B revenue and $20.7B FCF for reinvestment.
- High ROIC 28.5% indicating efficient capital allocation.
- Strong margins (Gross 48.7%, FCF 19.3%) supporting dividend sustainability.
- Diversified operations mitigating single-commodity risks.
Risk Factors
- Negative Revenue growth -10.1% from commodity price cycles.
- Moderate Total Debt to Equity 46.9% vulnerable to interest rate hikes.
- Exposure to global mining regulatory changes.
Stock #2: Southern Copper Corporation (SCCO)
| Metric | Value |
|---|---|
| Market Cap | $162.3B |
| Quality Rating | 7.4 |
| Intrinsic Value | $68.6 |
| 1Y Return | 108.4% |
| Revenue | $13.4B |
| Free Cash Flow | $2,704.3M |
| Revenue Growth | 17.4% |
| FCF margin | 20.2% |
| Gross margin | 56.7% |
| ROIC | 34.8% |
| Total Debt to Equity | 66.0% |
Investment Thesis
Southern Copper Corporation (SCCO) boasts a Market Cap of $162.3B and strong Quality rating of 7.4, with ValueSense intrinsic value at $68.6 signaling upside. The company generated Revenue of $13.4B and Free Cash Flow of $2,704.3M, fueled by positive Revenue growth of 17.4% and impressive FCF margin of 20.2%. Metrics like Gross margin 56.7% and ROIC 34.8% underscore operational excellence, while 1Y Return of 108.4% reflects copper demand strength. Total Debt to Equity at 66.0% is offset by high returns, making SCCO a compelling copper stock pick in the basic materials space for investors eyeing growth.
Key Catalysts
- Robust Revenue growth 17.4% from rising copper prices.
- Superior ROIC 34.8% and Gross margin 56.7% for profitability.
- Strong FCF $2,704.3M enabling expansions.
- 1Y Return 108.4% momentum in metals recovery.
Risk Factors
- Elevated Total Debt to Equity 66.0% amid rate volatility.
- Commodity price dependency for copper operations.
- Potential supply chain disruptions in mining.
Stock #3: Newmont Corporation (NEM)
| Metric | Value |
|---|---|
| Market Cap | $126.7B |
| Quality Rating | 7.1 |
| Intrinsic Value | $74.5 |
| 1Y Return | 162.3% |
| Revenue | $15.9B |
| Free Cash Flow | $4,551.0M |
| Revenue Growth | (5.9%) |
| FCF margin | 28.7% |
| Gross margin | 44.7% |
| ROIC | 17.9% |
| Total Debt to Equity | 1.4% |
Investment Thesis
Newmont Corporation (NEM), with a Market Cap of $126.7B and Quality rating of 7.1, offers intrinsic value of $74.5 per ValueSense data. It reports Revenue of $15.9B and Free Cash Flow of $4,551.0M, with FCF margin at 28.7% despite Revenue growth of 5.9%. Key strengths include Gross margin 44.7%, ROIC 17.9%, and minimal Total Debt to Equity 1.4%, complemented by a standout 1Y Return of 162.3%. This positions NEM as a low-debt gold leader in undervalued gold stocks for defensive investment opportunities.
Key Catalysts
- Exceptional 1Y Return 162.3% from gold price surges.
- High FCF margin 28.7% and $4,551.0M cash flow.
- Low Total Debt to Equity 1.4% for financial flexibility.
- Solid Gross margin 44.7% in precious metals.
Risk Factors
- Mild Revenue growth decline -5.9% tied to production.
- Gold price fluctuations impacting earnings.
- Operational risks in global mining assets.
Stock #4: AngloGold Ashanti Limited (AU)
| Metric | Value |
|---|---|
| Market Cap | $47.8B |
| Quality Rating | 8.3 |
| Intrinsic Value | $123.6 |
| 1Y Return | 210.3% |
| Revenue | $8,575.0M |
| Free Cash Flow | $2,524.0M |
| Revenue Growth | 11.1% |
| FCF margin | 29.4% |
| Gross margin | 45.9% |
| ROIC | 26.8% |
| Total Debt to Equity | 24.2% |
Investment Thesis
AngloGold Ashanti Limited (AU) features a Market Cap of $47.8B and top-tier Quality rating of 8.3, with intrinsic value at $123.6 indicating significant undervaluation. ValueSense highlights Revenue of $8,575.0M, Free Cash Flow of $2,524.0M, Revenue growth of 11.1%, and FCF margin of 29.4%. Strong Gross margin 45.9%, ROIC 26.8%, and low Total Debt to Equity 24.2% pair with a remarkable 1Y Return of 210.3%, making AU a high-conviction gold stock analysis pick.
Key Catalysts
- Leading Quality rating 8.3 and 1Y Return 210.3%.
- Healthy Revenue growth 11.1% and FCF $2,524.0M.
- Efficient ROIC 26.8% driving returns.
- Attractive intrinsic value $123.6 upside.
Risk Factors
- Geographic risks in international gold operations.
- Debt levels 24.2% sensitive to metal prices.
- Exploration cost overruns potential.
Stock #5: Gold Fields Limited (GFI)
| Metric | Value |
|---|---|
| Market Cap | $45.6B |
| Quality Rating | 8.0 |
| Intrinsic Value | $40.2 |
| 1Y Return | 190.0% |
| Revenue | $10.9B |
| Free Cash Flow | $2,046.4M |
| Revenue Growth | 24.6% |
| FCF margin | 18.7% |
| Gross margin | 43.1% |
| ROIC | 42.7% |
| Total Debt to Equity | 40.9% |
Investment Thesis
Gold Fields Limited (GFI) has a Market Cap of $45.6B and Quality rating of 8.0, with intrinsic value of $40.2. It delivers Revenue of $10.9B, Free Cash Flow of $2,046.4M, strong Revenue growth of 24.6%, and FCF margin of 18.7%. Metrics shine with Gross margin 43.1% and industry-leading ROIC 42.7%, alongside Total Debt to Equity of 40.9% and 1Y Return of 190.0%, positioning GFI as a growth-oriented gold mining stock pick.
Key Catalysts
- Stellar ROIC 42.7% and Revenue growth 24.6%.
- Robust 1Y Return 190.0% in gold rally.
- Solid FCF $2,046.4M for development.
- High Quality rating 8.0 validation.
Risk Factors
- Total Debt to Equity 40.9% in cyclical sector.
- Production variability from mine outputs.
- Currency risks in global footprint.
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Stock #6: Kinross Gold Corporation (KGC)
| Metric | Value |
|---|---|
| Market Cap | $39.9B |
| Quality Rating | 7.9 |
| Intrinsic Value | $19.4 |
| 1Y Return | 175.4% |
| Revenue | $6,423.9M |
| Free Cash Flow | $2,196.7M |
| Revenue Growth | 31.8% |
| FCF margin | 34.2% |
| Gross margin | 50.4% |
| ROIC | 21.1% |
| Total Debt to Equity | 15.6% |
Investment Thesis
Kinross Gold Corporation (KGC) offers a Market Cap of $39.9B, Quality rating of 7.9, and intrinsic value of $19.4. Key figures include Revenue of $6,423.9M, Free Cash Flow of $2,196.7M, explosive Revenue growth of 31.8%, and top FCF margin of 34.2%. With Gross margin 50.4%, ROIC 21.1%, low Total Debt to Equity 15.6%, and 1Y Return of 175.4%, KGC exemplifies high-growth potential in undervalued gold stocks.
Key Catalysts
- Leading Revenue growth 31.8% and FCF margin 34.2%.
- Strong 1Y Return 175.4% momentum.
- Low Total Debt to Equity 15.6% balance sheet.
- Efficient Gross margin 50.4%.
Risk Factors
- Gold dependency for sustained growth.
- Operational execution risks at scale.
- Moderate ROIC 21.1% vs. peers.
Stock #7: Royal Gold, Inc. (RGLD)
| Metric | Value |
|---|---|
| Market Cap | $17.5B |
| Quality Rating | 7.5 |
| Intrinsic Value | $102.0 |
| 1Y Return | 86.3% |
| Revenue | $855.9M |
| Free Cash Flow | $557.3M |
| Revenue Growth | 27.8% |
| FCF margin | 65.1% |
| Gross margin | 53.9% |
| ROIC | 33.5% |
| Total Debt to Equity | 22.5% |
Investment Thesis
Royal Gold, Inc. (RGLD), at Market Cap $17.5B and Quality rating 7.5, shows intrinsic value of $102.0. It generated Revenue of $855.9M, Free Cash Flow of $557.3M, Revenue growth of 27.8%, and exceptional FCF margin of 65.1%. Supporting stats: Gross margin 53.9%, ROIC 33.5%, Total Debt to Equity 22.5%, and 1Y Return of 86.3%, ideal for royalty-focused basic materials investment ideas.
Key Catalysts
- Outstanding FCF margin 65.1% from royalty model.
- Strong Revenue growth 27.8% and ROIC 33.5%.
- 1Y Return 86.3% in precious metals.
- Manageable Total Debt to Equity 22.5%.
Risk Factors
- Reliance on partner mine performance.
- Smaller revenue base vs. producers.
- Streaming contract renewals.
Stock #8: United States Lime & Minerals, Inc. (USLM)
| Metric | Value |
|---|---|
| Market Cap | $3,448.9M |
| Quality Rating | 7.9 |
| Intrinsic Value | $62.3 |
| 1Y Return | 6.0% |
| Revenue | $364.8M |
| Free Cash Flow | $104.2M |
| Revenue Growth | 20.3% |
| FCF margin | 28.6% |
| Gross margin | 48.1% |
| ROIC | 26.6% |
| Total Debt to Equity | 0.7% |
Investment Thesis
United States Lime & Minerals, Inc. (USLM) has a Market Cap of $3,448.9M, Quality rating of 7.9, and intrinsic value of $62.3. Figures show Revenue of $364.8M, Free Cash Flow of $104.2M, Revenue growth of 20.3%, FCF margin 28.6%, Gross margin 48.1%, ROIC 26.6%, near-zero Total Debt to Equity 0.7%, and 1Y Return of 6.0%, suiting conservative value stock watchlist entries.
Key Catalysts
- Pristine balance sheet (Total Debt to Equity 0.7%).
- Steady Revenue growth 20.3% in niche materials.
- Solid ROIC 26.6% and margins.
- High Quality rating 7.9.
Risk Factors
- Modest 1Y Return 6.0% vs. sector.
- Smaller scale limiting upside.
- Industrial demand cycles.
Stock #9: WD-40 Company (WDFC)
| Metric | Value |
|---|---|
| Market Cap | $3,076.4M |
| Quality Rating | 6.7 |
| Intrinsic Value | $166.6 |
| 1Y Return | -1.1% |
| Revenue | $620.9M |
| Free Cash Flow | $78.2M |
| Revenue Growth | 2.9% |
| FCF margin | 12.6% |
| Gross margin | 55.4% |
| ROIC | 27.1% |
| Total Debt to Equity | 4.9% |
Investment Thesis
WD-40 Company (WDFC), with Market Cap $3,076.4M and Quality rating 6.7, presents intrinsic value of $166.6. It reports Revenue $620.9M, Free Cash Flow $78.2M, Revenue growth 2.9%, FCF margin 12.6%, Gross margin 55.4%, ROIC 27.1%, low Total Debt to Equity 4.9%, but 1Y Return -1.1%, offering branded stability in materials.
Key Catalysts
- High Gross margin 55.4% from brand strength.
- Efficient ROIC 27.1%.
- Low debt 4.9% for resilience.
- Intrinsic value $166.6 potential.
Risk Factors
- Negative 1Y Return -1.1%.
- Slow Revenue growth 2.9%.
- Consumer spending sensitivity.
Stock #10: TMC the metals company Inc. (TMC)
| Metric | Value |
|---|---|
| Market Cap | $2,227.4M |
| Quality Rating | 6.3 |
| Intrinsic Value | $4.2 |
| 1Y Return | 301.2% |
| Revenue | ($20.2M) |
| Free Cash Flow | ($45.0M) |
| Revenue Growth | N/A |
| FCF margin | 222.9% |
| Gross margin | 300.5% |
| ROIC | 103.7% |
| Total Debt to Equity | 0.0% |
Investment Thesis
TMC the metals company Inc. (TMC) features Market Cap $2,227.4M, Quality rating 6.3, and intrinsic value $4.2. Despite negative Revenue -$20.2M and Free Cash Flow -$45.0M, it shows Revenue growth N/A, high FCF margin 222.9%, Gross margin 300.5%, remarkable ROIC 103.7%, zero Total Debt to Equity 0.0%, and explosive 1Y Return 301.2%, as an emerging deep-sea metals play.
Key Catalysts
- Phenomenal 1Y Return 301.2%.
- Ultra-high ROIC 103.7% efficiency.
- Debt-free (Total Debt to Equity 0.0%).
- Innovative metals extraction potential.
Risk Factors
- Negative revenue and FCF indicating pre-commercial stage.
- High operational risks in ocean mining.
- Regulatory hurdles for new tech.
Portfolio Diversification Insights
These 10 best basic materials stocks create a balanced portfolio heavily weighted toward gold miners (NEM, AU, GFI, KGC ~45% allocation) with high 1Y returns (162%-210%), complemented by copper/diversified giants (BHP, SCCO ~35%) for stability, and smaller niche plays (RGLD, USLM, WDFC, TMC ~20%) for growth. Sector focus on commodities reduces tech volatility while Quality ratings average 7.4 and low average Total Debt to Equity (~23%) enhance resilience. Gold exposure hedges inflation, copper taps electrification trends, and royalties (RGLD) add low-risk income—ideal diversification for value stock portfolios blending large-cap safety with high-return miners.
Market Timing & Entry Strategies
Consider entry during commodity price dips, such as post-gold peak corrections or copper supply gluts, monitoring intrinsic value gaps widening beyond 20%. Dollar-cost average into top Quality rating names (AU, GFI 8.0+) over 3-6 months for volatility smoothing. Track ROIC >25% and FCF margin stability as buy signals; scale into leaders like NEM/BHP on Revenue growth rebounds. Use 1Y Return momentum for tactical adds, but pair with stop-losses at 15% drawdowns given cyclicality—this educational framework aids position sizing in basic materials stock picks.
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FAQ Section
How were these stocks selected?
These top 10 basic materials stock picks were chosen via ValueSense criteria emphasizing Quality ratings 6.3+, high intrinsic value upside, strong ROIC/margins, and robust 1Y returns, focusing on undervalued commodities leaders.
What's the best stock from this list?
AngloGold Ashanti (AU) leads with the highest Quality rating 8.3, intrinsic value $123.6, and 1Y Return 210.3%, though analysis favors diversification across the stock watchlist.
Should I buy all these stocks or diversify?
Diversification across gold (NEM, AU), copper (SCCO), and niche (RGLD, TMC) reduces sector risks; allocate 10-20% per stock based on Total Debt to Equity and FCF strength for balanced exposure.
What are the biggest risks with these picks?
Key concerns include commodity price volatility, negative growth in some (BHP, NEM), high debt (SCCO 66.0%), and pre-revenue stages (TMC), alongside mining regulations and operational hazards.
When is the best time to invest in these stocks?
Optimal timing aligns with intrinsic value discounts >20%, rising Revenue growth, or metal price recoveries; monitor FCF trends quarterly for entry in this undervalued stocks collection.