Along with its recent rate increase, the Fed has upgraded its growth and inflation forecasts—and this could bode well for commodity stocks, writes Validea CEO John Reese in in his article this week for Nasdaq.

Reese cites a tighter labor market, stabilizing oil prices and slowing appreciation of the U.S. dollar as potential contributors to inflation, and cites AAII Journal data pointing to a strong outlook for commodity stocks:

He identifies five commodity stocks worth a look:

• Ternium SA (TX), a producer of steel products and iron ore, is favored for its price-sales ratio, debt-equity ratio and cash flow-per-share (which is sufficient to sustain three years of losses).
• Terra Nitrogen Company, L. P. (TNH) produces nitrogen fertilizer products, principally ammonia and urea ammonium nitrate solutions. The company earns high marks for its healthy revenue base and liquidity as well as modest leverage and favorable earnings-per-share growth.
• Rio Tinto Plc (RIO) is a mining company focused on aluminum, copper and coal, diamonds and minerals and iron ore. Both trailing 12-month sales and cash flow-per-share exceed the respective market means, and a healthy dividend yield adds appeal.
• Cameco Corp. (USA) (CCJ) is a Canada-based uranium producer that scores well based on its book-market ratio (inverse of the price-book ratio), favorable return-on-assets and operating cash flow. The number of shares outstanding has remained stable, indicating adequate cash-generation from underlying operations.
• Dow Chemical Co. (DOW) is a manufacturer and supplier of chemical products for the agricultural, consumer and automotive markets that is favored for its size and number of shares outstanding (which well exceeds the market average). The company’s cash flow-per-share and trailing 12-month sales both exceed the respective market means.