With the growth of global population and economies, the demand for natural resources like oil, natural gas, metals and agricultural products is increasing rapidly. This presents great investment opportunities in natural resource companies that explore, extract, process and market these resources. By investing in the right natural resource firms, investors can benefit from the long-term appreciation and dividends. This article provides an overview of the major natural resource investing companies across different sectors, and key factors to consider when investing in them.
Large integrated oil and gas firms like ExxonMobil and Chevron
Major oil and gas companies like ExxonMobil, Chevron, Shell, BP and TotalEnergies are involved in everything from exploration to refining and marketing of oil and gas. With operations spread globally, these integrated giants offer stable cash flows and attractive dividends. However, oil prices can be volatile in the short-term, so investors should have a long-term horizon.
Specialized E&P companies focusing on exploration and production
While integrated majors participate across the value chain, there are specialized exploration and production (E&P) companies like EOG Resources, ConocoPhillips and Occidental that focus mainly on upstream activities. Being pure-play drilling and production companies, they can offer higher growth potential when oil and gas prices rise.
Metal and mining companies producing key industrial commodities
Metal and mining firms like BHP Billiton, Rio Tinto, Vale, Glencore and Freeport-McMoRan are major producers of iron ore, copper, aluminum, cobalt, zinc and other vital commodities for industrial sectors. As emerging markets industrialize, demand for base metals is projected to rise significantly.
Companies involved in agriculture, forestry, fertilizers and farm products
With population growth and rising living standards, the long-term demand outlook for agricultural commodities and food products is strong. Top companies in this sector include seed and fertilizer producers like Nutrien, Mosaic and FMC Corporation, as well as Tyson Foods, Archer-Daniels-Midland and Bunge that process crops and meats.
Diversified natural resource funds providing broad exposure
For investors looking for diversified exposure to the natural resource sector, there are mutual funds and ETFs like Vanguard Natural Resources ETF (VNR), Fidelity Natural Resources Fund (FNARX) and iShares Global Materials ETF (MXI). These funds invest across various natural resource stocks and commodities.
The natural resource sector offers attractive long-term investment opportunities as demand is projected to grow with economic development and population growth. By investing in a portfolio of leading natural resource companies with global scale and diversification, investors can benefit from the upside while mitigating risks specific to any single company or commodity.