Top 3 Materials Stocks That May Fall Off A Cliff In January

As the calendar turns to 2024, investors are keeping a close eye on the materials sector, which has been a mixed bag in recent months. While some companies have performed well, others face headwinds that could lead to a decline in stock prices. In this article, we will examine three materials stocks that may fall off a cliff in January, based on their current fundamentals, market conditions, and potential catalysts or headwinds.



1. MP Materials (MP)
MP Materials is a leading producer of rare earth elements, which are critical components in various industries, including electronics, automotive, and defense. However, the company's stock has been volatile in recent months, and there are several reasons to be cautious about its performance in January.

Firstly, MP Materials reported a loss of $0.11 per share in Q4 2023, missing the consensus EPS forecast of $0.01. This earnings miss, coupled with weak guidance, could lead to a decline in investor confidence and stock price. Additionally, the company's revenue growth rate of -0.13 is negative, which is concerning. While MP Materials' guidance for Q4 NdPr oxide production to remain flat and Q1 2025 to show significant acceleration suggests potential improvement in revenue growth, investors may remain skeptical until the company delivers on its promises.

Moreover, MP Materials' current valuation is higher than its historical averages and industry peers. The company's P/E ratio of 23.47 is higher than its historical average of around 18, and its forward P/E ratio of 15.97 is also higher than the industry average of around 12. This overvaluation, combined with the company's earnings miss and negative revenue growth, could make MP Materials a target for investors looking to rotate out of overvalued stocks in January.

2. Cenovus Energy (CVE)
Cenovus Energy is a Canadian integrated oil and natural gas company with operations in Canada and offshore Africa. While the company's stock has performed well in recent months, there are several reasons to be cautious about its performance in January.

Firstly, Cenovus Energy's stock price has been driven by the company's strong earnings and dividend growth. However, the company's earnings growth is heavily dependent on commodity prices, which can be volatile. If commodity prices decline in January, Cenovus Energy's earnings and stock price could be negatively impacted.

Additionally, Cenovus Energy's debt levels are relatively high compared to its peers, which could make the company more vulnerable to changes in interest rates and economic conditions. If interest rates rise in January, Cenovus Energy's cost of capital could increase, leading to a decline in the company's stock price.



3. Ross Stores (ROST)
Ross Stores is a discount retailer that operates under the Ross Dress for Less and dd's DISCOUNTS brands. While the company's stock has performed well in recent months, there are several reasons to be cautious about its performance in January.

Firstly, Ross Stores' stock price has been driven by the company's strong earnings and revenue growth. However, the company's earnings growth is heavily dependent on consumer spending, which can be volatile. If consumer spending declines in January, Ross Stores' earnings and stock price could be negatively impacted.

Additionally, Ross Stores' valuation is relatively high compared to its peers, which could make the company more vulnerable to changes in market sentiment and investor preferences. If investors rotate out of retail stocks in January, Ross Stores' stock price could be negatively impacted.



In conclusion, MP Materials, Cenovus Energy, and Ross Stores are three materials stocks that may fall off a cliff in January, based on their current fundamentals, market conditions, and potential catalysts or headwinds. Investors should closely monitor these companies' earnings reports and any changes in the market or economic conditions to make informed decisions about their investments.