A surge in data centre building has caused a big jump in demand for the things that go into them. And a meaningful rotation out of tech and into materials could have a huge effect on share prices.

Market sectors

Right now, materials companies make up around 3% of the S&P 500. That compares to around 30% for the tech sector, not including the likes of Alphabet, Amazon, and Meta Platforms. 

This means cash moving from one sector to the other could have a disproportionate effect on share prices. And I think there’s a decent chance this is something we might see in the stock market.

Microsoft has a market value of $2.95trn, while Linde – the largest stock in the materials sector – is worth $236bn. That means an 8% rotation from Microsoft is enough to double Linde’s share price.

There have been signs that this kind of rotation might be starting. And if it gathers steam, then things could get really interesting across the materials sector going forward.

Investment strategies

One way to try and profit from this might be to consider buying the iShares S&P 500 Materials Sector ETF, offering broad exposure to materials companies in the S&P 500. 

The trouble is, I think some of the enthusiasm is likely to be short-lived. And it’s going to be hard for supply to react to demand falling away, which could lead to prices crashing further down the line.

In some cases though, the long-term picture looks more constructive. One example is copper, which is an important part of the shift to renewable energy, as well as data centre building. Given this, I think it’s well worth looking at some names in the copper mining space. And there’s one in particular that stands out to me. 

Copper mining

Southern Copper (NYSE:SCCO) has the largest copper reserves of any listed company and the lowest production costs. For anyone optimistic about future demand, that combination’s hard to beat.

It means there’s still significant room for things to get a lot better from this point. And it doesn’t need an earth-shattering rotation to send the stock up significantly from its current level.

The stock has been on fire over the last 12 months, climbing 145%. But the company still has a market value of around $182bn – around 6% of Microsoft’s current worth. 

Source: Company Q4 2025 Presentation

The big risk is that data centre spending slows, which could cause demand to fall and prices to drop. But even if things do turn downwards, the firm’s cost-advantaged assets should still be a big advantage.

Rotation

As always, the thing that matters most to me as an investor looking for stocks to buy is the long-term outlook for the underlying business. But it’s a bonus when the near-term outlook is also positive.

I can see a good case for thinking demand for copper is going to be strong for some time. And with the materials sector a relatively small part of the stock market, it could be a good time to consider buying.

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2026 could be another strong year for global stock markets. And I think AngloGold Ashanti (NYSE:AU) and Southern Copper (NYSE:SCCO) might be set for more blockbuster share price gains after a spectacular 2025.

Want to know why? Read on.

Go for gold

Gold delivered spectacular price gains last year, rising 70% as demand for safe havens rocketed. Gold stocks didn’t just follow in their slipstream — most produced even greater returns, reflecting these companies’ ability to grow profits more sharply than metal prices can rise.

Take AngloGold Ashanti, whose share price surged 266% in 2025. It wasn’t just a beneficary of the ‘leverage’ effect, though. While their costs remain largely fixed, earnings can rocket as rising gold prices can supercharge their revenues.

This US-listed gold share‘s robust balance sheet and impressive production record also attracted investors. Group output rose 17% in Q3, thanks to ramp-ups at existing mines and contributions from the recently-acquired Sukari asset.

Ultimately, though, AngoGold’s share price is driven by movements in the bullion price. And following that bumper 2025, the gold stock could experience some volatility if heavy profit taking sets in.

Yet I’m confident gold can recover from any pullbacks and continue its long-running charge higher. As Charu Chanana, chief investment strategist at Saxo Bank comments:

The big picture, however, for precious metals still looks structurally supportive with easier rates ahead, persistent fiscal and geopolitical unease, and ongoing diversification demand. That means any pullbacks may be seen as opportunities for long-term investors to rebuild exposure.

I think AngloGold’s a top stock to consider in this climate. Its large portfolio of assets located across 10 countries helps investors to spread risk.

Southern comforts

Gold’s not the only major commodity currently trading around record highs. Copper also struck new peaks in December, and rose 38% during 2025.

Thanks to the leverage factor, this pulled Southern Copper’s share price 95% higher, far greater than the red metal’s own price ascent.

But can copper prices continue their stunning rise in 2026? Unlike gold, which rises when investors become fearful, industrial metals like this can fall sharply.

However, the emergence of an enormous market deficit means the bellwether commodity could deliver further spectacular gains this year. Analysts at Citigroup have predicted prices could rise to $15,000 a tonne during Q2, following major supply disruptions in 2025 and improved demand as interest rates fall and the US dollar weakens.

Copper was last changing hands at around $12,160.

Like AngloGold Ashanti, Southern Copper has enormous scale, and is one of the world’s top ten producers of the essential metal. This puts it in great shape to capitalise on any fresh price gains. It also helps investors to effectively spread risk (the mining giant owns multiple mines in Mexico and Peru).

Given copper’s essential role in technology and renewable energy, demand could explode as these sectors rapidly grow. As a result, I think Southern Copper could be a top long-term stock to consider in a Stocks and Shares ISA.

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Arguably, building wealth takes discipline and time — with time being the most important variable to wealth creation.

Below are a number of investments that our contract writers have bought for the long haul and not touched since!

Please note that tax treatment depends on the individual circumstances of each client and may be subject to change in future. The content in this article is provided for information purposes only. It is not intended to be, neither does it constitute, any form of tax advice. Readers are responsible for carrying out their own due diligence and for obtaining professional advice before making any investment decisions.

Apple 

What it does: Apple designs and produces smartphones, computers and wearable devices. It also offers a range of services including apps and cloud storage. 

By Harshil Patel. By some distance, the oldest stock that I own in my ISA is Apple (NASDAQ:AAPL).  

Since my purchase around a decade ago, it has provided a tenfold return on my investment. That’s the equivalent of growing £1,000 into over £10,000.  

When I first bought these shares, Apple was already an established and dominant technology business. It offered a double-digit profit margin, and 30% return on capital employed.  

Today, it still displays similar high-quality attributes. 

One of the most powerful features of Apple’s business is its ecosystem. Once a customer owns a product or two, it becomes difficult to leave. It also results in repeat sales.  

New products like a VR headset could drive sales much higher over the coming years.  

Bear in mind that it’s possible that smartphone users keep older phones for longer before upgrading. This could have a negative impact on earnings. Premium prices could also become a barrier to affordability. 

Overall, though, I reckon this winner will keep winning.  

Harshil Patel owns shares in Apple. 

Associated British Foods

What it does: Associated British Foods is a highly diversified group, with a range of food, ingredients and retail businesses.

By Andrew Mackie: I bought my first tranche of Associated British Foods (LSE: ABF) at the end of 2019, just months before the Covid crash. That event was certainly a baptism of fire for me, but I didn’t panic and instead doubled down on my position. Then, in 2022, when its share price fell 20% below its Covid lows, I bought more whilst there was blood on the streets.

Although its share price has exhibited more volatility over the last three years than initially expected, I remain bullish on the company’s long-term prospects. What particularly attracts me is its highly diversified business model. When one part of the group is struggling, other parts pick up the slack. This has been all too evident recently.

Measured over a five-year period, its share price has performed poorly. However, since 2000 it has risen over 400%, excluding dividends. This is testament to the strength of its brands.

One of the biggest risks at the moment rests with its retail operations. Primark’s profit margins continue to be squeezed as a result of inflation across its supply chain. Energy and wage costs also remain elevated. If the economy does go into a deep recession, profits could nose-dive.

But as a company that has lived through several recessions, I fully expect it to recover on the other side.

Andrew Mackie owns shares in Associated British Foods.

Lloyds Banking Group

What it does: Lloyds Banking Group is a UK retail bank, and one of the country’s biggest mortgage lenders.

By Alan Oscroft. I first paid 99p for Lloyds Banking Group (LSE:LLOY) shares, back in 2015. And they’re worth less than half that today.

I’m poor at knowing when to sell. But I don’t think I made a mistake by not selling Lloyds.

By the time each crisis knocked the shares down, it was too late. It always looked like the market had over-reacted, and that the shares were better value. And I still got my dividends.

Right now, I’m looking at a stock valued on a price-to-earning (P/E) ratio of only 6.2, with a forecast dividend yield of 5.3%.

City analysts expect the financial sector to post the biggest earnings growth in the FTSE 100 this year. And they have the banks down to be key drivers of dividend growth, heading towards a new record in 2024.

There’s a risk that continued high inflation and interest rates will keep bank stocks down. But I’m thinking of buying more again.

Alan Oscroft owns Lloyds Banking Group shares.

Southern Copper

What it does: Southern Copper is involved in various aspects of copper production. Its operations are based in Peru and Mexico.

By Stephen Wright. As the name suggests, Southern Copper (NYSE:SCCO) is a copper producer. I’m optimistic on the outlook for copper in general and for this company in particular. 

Over time, I expect the shift away from fossil fuels and towards renewable energy to accelerate. And I think that this is going to mean the demand for copper is going to be strong.

Southern Copper has some of the lowest costs of any copper producer. This, in my view, is important for a business where the product is essentially undifferentiated. 

The share price has gone up and down lately (reflecting changes in the copper price), but I’ve never thought about selling since my original purchase three years ago. I’ve bought more when I thought the price was attractive, though.

Operations based in Peru are subject to some political uncertainty and this presents a risk. But since I bought the stock, I’ve just let the cash roll in.

Stephen Wright owns shares in Southern Copper.

The post “The oldest holding in my Stocks and Shares ISA is…” appeared first on The Motley Fool UK.

The two stocks on my radar at the moment are BP (LSE:BP) and Southern Copper (NYSE:SCCO). Both have been falling lately, but at today’s prices, they look attractive to me.

Commodities

Commodities prices have been struggling over the last 12 months. The price of oil has fallen by 33% and copper is down by around 14%.

Normally, falling commodities prices are due to a lack of demand. But according to Jeff Currie, the Head of Commodities Research at Goldman Sachs, this hasn’t been the case.

While demand in the West has been slowing, emerging markets have been more than making up the shortfall. As a result, inventory levels have been declining. 

Currie points out that this makes sense if a recession is imminent. But Goldman has the probability of a recession in the US in the next year at around 35%.

If an economic slowdown doesn’t materialise, then inventory levels are likely to be too low to cope with demand. So if there’s no recesssion, prices are likely to rise sharply.

Mindful of this, I’m looking to take advantage. And BP and Southern Copper are two stocks that stand out to me.

BP

When it comes to investing in oil, I’d like to stick to the big companies. And BP stands out to me as the stock offering the best value.

The stock at a price-to-earnings (P/E) ratio of around four. That makes it inexpensive compared to the other oil majors.

The reason for the discount is probably the additional risk. Fossil fuels are a highly politicised issue in the UK in ways, which isn’t something faced by either Chevron or ExxonMobil.

That’s a genuine risk, but the stock looks like a good investment to me. I’d buy it as a passive income investment to take advantage of the potential for oil prices to rise.

Copper

Opportunities to buy shares in copper miners don’t come around often. The reason is simple – most people know the long-term outlook for the metal is pretty good.

Demand stands to benefit from electrification and the move towards renewable energy sources. And the outlook for copper seems clearer than either nickel or lithium.

Its operations are based in Peru and Mexico and its mines have around 50 years of life ahead. Crucially, they also have some of the lowest production costs of any copper miner anywhere.

Again, government intervention is a risk – as shareholders in SQM and Albemarle will know. But with a 6% dividend, I think the stock is a good passive income opportunity right now.

Recession?

I see lower inventory levels as a sign commodities prices are going to rise. The only question is when.

According to Currie, it’s likely to happen soon, because people are overestimating the chances of a recession. Even if he’s wrong, I still see this as a good time to buy mining stocks.

Both BP and Southern Copper offer solid dividends for investors willing to sit and wait. That’s why both are on my list of stocks to buy in June.

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In my view, there’s never a bad time to start building passive income streams. And I could get started today with just £100 if I invested in the right companies.

Federal Realty Investment Trust

Top of my list of stocks to buy is Federal Realty Investment Trust (NYSE:FRT). The company is a real estate investment trust (REIT) that makes its money by renting out retail properties.

With this type of company, it’s important to consider the effects of e-commerce on the industry. As more and more people shop online, demand for retail properties is likely to decline.

I think that Federal Realty is reasonably well protected from this threat, though. Its properties are mostly focused in areas that are close to city centres and are therefore likely to be desirable even if demand in general subsides a bit.

At today’s prices, the stock has a dividend yield of just over 3%. So a £100 investment would pay me around £3 per year in passive income.

That doesn’t sound like a lot, but I could grow it over time. If I continued to invest £100 per month in the stock as well as reinvesting my dividends, I could be receiving around £1,700 per year after 30 years.

Southern Copper

I’d also look at buying shares in Southern Copper (NYSE:SCCO). The company makes its money by owning and operating copper mines across South America.

Southern Copper is a very different type of investment to Federal Realty Investment Trust. As a commodities stock, the business is likely to be much more volatile.

The company’s profits are likely to fluctuate as the price of copper rises and falls. That means that I expect the dividend that the company pays out to be volatile. 

This means that there’s a risk of sharp declines in the company’s share price. But I think that this could be a great investment despite the risks.

In my view, demand for copper is likely to increase over time. An important part of this is the move to renewable energy and electric cars. 

If I’m right about that, then Southern Copper stands to be a major beneficiary. With some of the lowest costs in the industry, it could make some serious profits, which would benefit me as a shareholder.

Building passive income

If I were to invest £100 into Federal Realty and Southern Copper today I could start generating passive income straight away. Even if the amount that I generate at the start isn’t huge, it’s important to focus on the trajectory that I’m on. 

By reinvesting my dividends back into the businesses, I could increase this over time. But the sooner I get started, the more opportunity I have to compound my returns.

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