For investors with the view that we have seen the worst of the correction in commodity stocks for 2013, or will soon shortly, the research team at Oppenheimer believes increased exposure to the commodity-sensitive sectors of energy and materials is the way to go. They also hold a further bias toward materials, given its leverage to any signs of recovery in global growth and its recent historical tendency to lead over the ensuing three- and six-month periods following a corrective trough in equities.

Within materials, they strongly favor metals and mining for investors in search of a deeply out of favor industry levered to improved developments on the global macroeconomic front. Specifically, the industry is fast approaching a likely capitulation in bearish analyst sentiment, and similar to the sector, would benefit tremendously from any upside surprises to emerging markets growth prospects. Here are the top commodity stocks to buy at Oppenheimer.

Compass Minerals International Inc. (NYSE: CMP) looks to be a top stock to buy in the mining sector. The company has increased its revenue over each of the past four quarters, from $179 million in the second quarter of 2012 to $384 million in the first quarter of 2013. That represents more than a 100% increase and is a sign that operations are expanding for the company. The Thomson/First Call price target for the stock is way under current trading levels at $75. Investors are paid a 2.4% dividend.

Cliffs Natural Resources Inc. (NYSE: CLF) is an international mining and natural resources company. Cliffs is the largest producer of iron ore pellets in North America, with approximately 25.5 million tons of annual capacity (approximately 44.2% of the North American pellet market) serving integrated steel producers in the United States and Canada, as well as the seaborne market to Europe and Asia. The stock has been pounded, and some analysts think it could double in 12 months. The consensus price target for the stock is $21. Investors are paid a tidy 3.6% dividend.

Worthington Industries Inc. (NYSE: WOR) ended fiscal 2013 with cash and cash equivalents of $51.4 million, up 25% year-over-year. Long-term debt increased 58% year-over-year to $406.2 million. Operating cash flows for the full year increased 57% year-over-year to $273 million. The company also recently increased its dividend. The consensus price target is for this diversified metal processor is $34. Investors are paid a 1.7% dividend.

Kaiser Aluminum Corp. (NASDAQ: KALU) has spent the past 10 years restructuring the company to be more cost efficient and competitive. During its first quarter of 2013, the company beat analysts’ estimates. Its net income was $34 million, or $1.73 per share. That is higher than the roughly $27 million, or $1.38 per share, it reported during the same quarter of 2012. The consensus price objective for the stock is $72. Shareholders receive a 1.9% dividend.

RTI International Metals Inc. (NYSE: RTI) recently announced its wholly owned subsidiary RTI Claro earlier this year entered into a long-term contract with Bombardier aerospace to supply precision machined components and assemblies for several Bombardier aircraft models. This agreement, which replaces a recently expired supply arrangement, runs through 2019 and calls for RTI to manufacture components and assemblies not previously provided by RTI. The consensus price target for the stocks stands at $35.

The commodity research team at Oppenheimer was also very positive on paper and forest product stocks. Based on their earnings revision work, Domtar Corp. (NYSE: UFS), Kapstone Paper and Packaging Corp. (NYSE: KS) and Schweitzer-Mauduit International Inc. (NYSE: SWM) all screened very well and are stocks to buy.

The bottom line for investors is that commodity names that were once the hottest trade on Wall Street are now relegated to the penalty box. No sector stays out of favor forever. Check out the homebuilding stocks, many of which were in the single digits five years ago. While patience may be required with a contrarian stance, the reward down the road may be outstanding.

Thank you for reading! Have some feedback for us?
Contact the 24/7 Wall St. editorial team.