Against the backdrop of soaring commodity prices and demand support for profits, resource stocks have outperformed the broader market over the past three months.

Meanwhile, Wall Street continues to be bullish on mining and energy stocks, believing that the rich shareholder returns and significant discount to the broader market provide upside potential for these industry stocks.

According to the latest report from Morgan Stanley analyst Mislav Matejka, the rise in industrial raw material prices in the second half of the year will boost mining companies' earnings per share. Matejka also believes that energy stocks can generate strong cash flow, offer attractive dividend yields, and hedge geopolitical risks.

Similarly, Morgan Stanley analyst Martijn Rats' team has maintained its 'shareholding' rating on the energy industry, citing the sustained structural outlook for energy companies over the next few years.

They expect that under the push of the peak season demand, the tightening of crude oil supply will make oil prices show an upward trend this summer. However, earlier, OPEC+ announced that it will gradually cancel the voluntary additional production cut from the end of September, causing Brent crude to fall below $80 per barrel.

In addition, the attractiveness of energy stocks also comes from their huge shareholder returns. Energy giants such as Shell and BP have listed share buybacks as key goals in their latest quarterly reports.

Analysts expect European companies to return more than 600 billion euros (or $652 billion) to shareholders this year, with energy companies being one of the main contributors.

Analysts also point out that with the continuous recovery of the economy, the energy and materials industry in Europe will return to the growth track in 2025 after experiencing almost two years of stagnation.

Another team under Deutsche Bank, including analysts Alain Gabriel, is more bullish on European metal and mining stocks.

They point out that mining stocks are currently trading at a significant discount relative to historical levels. The stable demand environment and continued tight supply will continue to support commodity prices at a good level.

In the past three months, commodities as a whole have shown a 'bull market' trend, especially the prices of basic metals such as copper and nickel have surged.

French Industrial Bank strategist Manish Kabra and others believe that compared with metals themselves, stocks of companies in this industry are a better choice to share the dividends of rising commodity prices.

Kabra said that the rise in metal prices indicates that the growth rate of mining companies' earnings per share may have reached its turning point, and added that his team is more bullish on mining stocks than energy stocks.

Susana Cruz, a strategy analyst at Liberum, said that one of the main risks facing commodities at present is the slowdown of the US economy. However, she also pointed out that the recovery of the European economy is turning positive, which may provide support for demand in the second half of the year.

Editor/ruby