The research team at Merrill Lynch has found that global investors remain very “underweight” in their holdings of metals and mining shares, while valuations do not look stretched. This contrasts with decent fundamentals for a range of commodities: global steel prices have been rising, China has been restocking iron ore and the pace of copper destocking in the country has slowed. Yet, as they point out in a new research report, positioning in the equities has just started to adjust. The key takeaway for investors? The potential upside in the stocks more than outweighs the downside.

Some 72% of global fund managers expect a stronger global economy, the most bullish growth consensus since December of 2009. Eurozone optimism has reached nine-year high, and China expectations have bounced, especially after Monday’s data. Savvy investors are seeing the worldwide growth and putting money back to work in commodities and steel. Here are the top stocks to buy now from Merrill Lynch.

Allegheny Technologies Inc. (NYSE: ATI) is the top steel and alloy play from Merrill Lynch. The company is one of the world’s largest producers of specialty metals. Its diverse product mix includes titanium, nickel alloys, precision strip and exotic alloys. Although Allegany produces some commodity items such as stainless steel products, its focus and a significant portion of its profits are generated from innovative, specialty alloys that only a few companies in the world are able to produce. Merrill Lynch has a $20 price target. The Thomson/First Call target is $30. Investors are paid a 2.6% dividend

Barrick Gold Corp. (NYSE: ABX) was crushed as the price of gold plunged in the spring. If the company keeps its diversified portfolio of mines intact, with Bald Mountain and Marigold in the United States, Pierina in Peru, Buzwagi in Tanzania and promising cost-efficient projects on the way (Pueblo Viejo Project), the stock may be poised for a strong rebound. Merrill Lynch has a $25 price target. The consensus estimate is lower at $20. Investors are paid a 1.0% dividend.

CONSOL Energy Inc. (NYSE: CNX) is one of the ultimate contrarian plays at Merrill Lynch. The company is the only coal stock in their universe to be rated as a stock to buy for investors. Cost cutting has helped to lift the stock, and more could be on the way. Merrill Lynch has a $36 price target, while the consensus is pegged higher at $41. Investors are paid a 1.5% dividend.

Freeport-McMoRan Copper & Gold Inc. (NYSE: FCX) is a top diversified name to buy at Merrill Lynch and may offer investors the best total return play. The company by almost all metrics is undervalued, and it continues to raise its dividend yearly. Merrill Lynch has a $37 price target, and the consensus figure is $36.50. Investors are paid a very solid 4.0% dividend.

Kaiser Aluminum Corp. (NASDAQ: KALU) is the only aluminum stock to make the cut at Merrill Lynch. The company offers investors a play on the growing demand for aluminum in the aerospace and automotive industries, but without exposure to the volatile (and now declining) price of aluminum. The aerospace and automotive industries are in cyclical uptrends and the amount of aluminum that goes into airplanes and cars is increasing. The Merrill Lynch price objective is at $75, and the consensus target is slightly higher at $78. Investors receive a 1.7% dividend.

Kinross Gold Corp. (NYSE: KGC) may be the stock that give investors the most amount of leverage on a gold rebound. Management reduced the company’s annual capital expenditures forecast to $1.45 billion from $1.6 billion, saving $180 million from its cost restructuring initiatives. Cancellation of its upcoming semiannual dividend payment to its shareholders will save $182 million per year. Kinross expects to produce gold at a cost of $1,000 to $1,200 an ounce this year. The Merrill Lynch target is $7.00, and the consensus target is $6.55. The dividend, which soon will be cancelled, has a yield of 2.9%.

Southern Copper Corp. (NYSE: SCCO) may be the top way to play the copper trade. The current drop in copper prices is due largely to the global slowdown triggered by reduced growth in China, which accounts for nearly 40% of global copper consumption. However, according to the International Copper Study Group, worldwide copper demand for 2013 is still expected to grow by 4.3% and increase to 5.1% for 2014. Merrill Lynch has a $36 price objective. The consensus number stands lower at $32. Investors are paid a 1.7% dividend.

Vale S.A. (NYSE: VALE) is another top diversified name that offers investors a solid total return prospect. With a surge in iron ore purchasing in China, Vale figures to ramp up earnings the rest of this year and through 2014. J.P. Morgan came out Monday with a very bullish stance on Vale as well. Merrill Lynch has a $20 price target, and the consensus number is posted at $19. The stock pays an outstanding 4.8% dividend.

Contrarian investing can be difficult, as can value investing. The tide for stock sectors to turn when they are out-of-favor can be lengthy. The mining and metals sector has been in the investing doghouse for quite some time, so some of the waiting game has played out. The key to remember is the global growth angle. If that takes off as expected, demand for these top names will jump, and jump fast.

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