Iron Stocks to Buy As Power Grid Batteries Get an Upgrade

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Jul. 23 2021, Published 10:52 a.m. ET

Investing in commodities of new materials like base metals is a strategic move in the stock market. Iron is particularly interesting due to its dual application as standalone iron or carbon-infused steel.

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One startup has made great strides in its iron-built batteries. Big names like Jeff Bezos and Bill Gates are getting in on the action. Retail investors can snag a slice of the segment with these iron stocks.

Form Energy is reconfiguring how batteries are made.

While most batteries are lithium-ion, Form Energy has developed a battery made from inexpensive iron pellets. The batteries are long-lasting with the ability to run for 150 uninterrupted hours.

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While Form Energy's iron batteries are too heavy for electric vehicles, they have a crucial application in power grids. Cheap and long-lasting iron batteries could help propel power grids in the U.S. and abroad toward a totally renewable grid model.

Mateo Jaramillo, Yet-Ming Chiang, Ted Wiley, William Woodford, and Marco Ferrara founded the startup four years ago. Bezos and Gates back the company, which says a lot about the product's potential.

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Form Energy is still private, but iron companies are helping to supply the industry with the materials necessary for innovations like this.

BHP Group plays a role in iron ore mining.

Iron is an abundant metal, and it's mined from underground rocks through oxides known as iron ore.

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Australian company BHP Group (NYSE:BHP) mines iron ore and it distributes its products globally (with one of the top locations being Houston).

Despite its international geography, BHP is a U.S.-listed public company. That makes it easy for American investors to play into the stock.

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The large-cap company is currently sitting at more than $176 billion. The shares are up 43.69 percent over the last year and exceed the S&P 500 12-month total returns by a few percentage points. This investment works best over the long term, although swing-term positions could be beneficial if you read the market's buy and sell signals well.

Vale is a raw materials member in the iron mining industry.

Headquartered in Brazil, Vale SA (NYSE:VALE) is another U.S.-listed company. It maintains a strong ESG strategy through board diversity, alignment with the Paris Climate Agreement, and more.

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Vale stock is up 95.31 percent over the last year, outperforming the market by a prominent margin. It's another large-cap company, and industry volatility is consistent with this commodity brand.

Nucor covers the steel spectrum, iron included

Nucor (NYSE:NUE) is a diverse company located domestically in North Carolina. It participates in iron melting through the use of electric arc furnaces, which are more affordable and sustainable than blast furnaces. This taps into the strategy that Form Energy is embodying.

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Nucor stock is up 118.9 percent over the last year, which makes it the most profitable public company on this list during that period. It's on the smaller side of the large-cap definition with $27.9 billion, which could help diversify your commodities investments. 

For U.S. investors, this could be a smart first play into the iron market, although the timing is important to help compound your returns.

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