6th lesson to investment management

What are material investments?

 Material Investment means any Investment by the Company or any Restricted Subsidiary
(other than and Investment in the Company or a Restricted Subsidiary, any Temporary
Cash Investment or any Hedging Obligation) in one or a series of related transactions in
excess of 100.0 million.

What are investment materials?

 An investment material can be described as a ceramic material that is suitable for
forming a mold into which a metal or alloy is cast. When a restoration or appliance is
being made by a “lost wax” process, the wax pattern is embedded in an investment
material

What are basic materials?

 Basic materials are substances that occur naturally such as oil, stone, and gold. The
basic materials sector is subject to supply and demand.
 The Best Materials Stocks Of 2022

 Materials like metal, concrete and chemicals are the foundation of the global economy—
every sector requires basic materials, after all. Materials sector stocks belong to
companies that manufacture, mine and produce the core materials that make production
possible worldwide.
 If you’d like to add materials stocks to your portfolio, you have a wide range of options.
To help with your research, here are profiles of the 10 largest materials stocks by total
market capitalization, along with a look at their most recent performance.

Understanding Materials Stocks

 Materials sector stocks produce the core materials used by other

industries. This includes the mining of raw materials as well as the
manufacturing of chemicals and other man-made materials. This sector
does not include companies that extract or process oil, natural gas and
coal, which are grouped in the energy sector.

Some of the major divisions of the materials sector include:

 Chemicals stocks. Chemical companies turn raw materials into chemicals that are used for other
purposes, like converting nitrogen and phosphorus into chemical fertilizer. This also includes the
production of industrial gases.
 Construction materials stocks. These companies produce the materials used for construction
projects, like paint, PVC pipe and wood coating.
 Paper and packaging stocks. These firms create paper along with other materials used for
packaging, cartons and containers.
 Metals and minerals stocks. Here we have companies that focus on the production of metals
and minerals, usually via mining.
Advantages of Investing in Materials Stocks

 They perform well during boom economic cycles. When the economy is expanding,
there’s more demand for basic materials needed to build more houses, cars, electronics
and other products. This pushes up the price of materials as well as the performance of
these stocks.
 Growth in developing countries boosts materials demand. As countries like China and
India continue to develop and expand their economies, they drive growing demand for
materials, supporting the long-term prospects of basic materials stocks.
 Reliable cash flow. Since materials are necessary to build any product, there is usually a
certain floor of demand no matter what the global economy is doing, especially for
essential materials used in health care, food and power generation.
 Above-average dividend yields. Materials stocks like to share the wealth with their
stockholders; they tend to pay higher average dividends than other sectors.

 Risks of Investing in Materials Stocks

 They may lose value during economic downturns. Cyclical demand for
some materials means that when the economy goes into recession, material
prices tend to fall, hurting the stock performance of these companies.
 Less exciting companies. There’s less innovation and opportunity for fast
growth in the materials sector. These companies tend to use scale to drive
growth, rather than creating new technologies. As a result, there’s less
opportunity for rapid share appreciation, even from the best materials stocks,
versus other sectors like technology..
 High-cost activities reduce profit margins. Producing materials can be a
low-margin business, especially for expensive activities like mining. Because of
this, even massive companies with billions in revenue might have very thin
profits.
 Vulnerable to international supply chain issues. Materials companies
tend to be more global, with sources of raw materials spread throughout the
entire world. As a result, they are more vulnerable to international supply chain
problems and political issues like tariffs.