) -- It's been a great year for commodity stocks, as everything from silver and copper to wheat and cotton hit fresh highs in 2010.

Commodity stocks offer a high-risk, high-return way to play the boom in commodities as financial and operational leverage of companies can magnify returns in a bull phase and exacerbate declines in a bust.

M&A activity has also been driving the valuations of smaller companies. China and other emerging markets are consuming commodities at an unprecedented scale. As supplies tighten, larger companies are scouting for mid-cap companies that will help them quickly scale up production, which could otherwise take years to come on stream.

>>Commodities That Could Heat Up in 2011

While gold and silver mining stocks dominated high flyers this year, several mid-cap oil and chemical companies also figure in our list.

Here is the list of top performing commodity stocks with a market cap of over $2 billion as of Dec. 21.

10. Solutia

YTD Returns:



( SOA) is a global manufacturer and marketer of chemical and engineered materials that are used in a range of consumer and industrial applications.

The company derives only 25% of its revenues from the U.S. More than a third of its revenue comes from Europe and China accounts for 12%.

Solutia caters to a diverse base of industries including the fast-growing solar sector. The company intends to broaden its solar business and is targeting a 20% compound annual growth rate from the solar segment over the long term.

Solutia produces advanced interlayers that are used to encapsulate photovoltaic solar cells. It is currently expanding its encapsulant facility in Suzhou, China.

"The photovoltaic market has seen tremendous growth in 2010, and the majority of photovoltaic module production is in Asia," said Tim Wessel, president and general manager of Solutia's Advanced Interlayers division. "We continue to invest to meet growing demand and provide cost-effective solar encapsulant solutions in the greater Asia-Pacific region and around the world."

Solutia expects to earn $2 to $2.25 per share from continuing operations in 2011, excluding one-time costs. It also forecast revenue of $2.1 billion to $2.2 billion.

9. Silvercorp Metals

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Silvercorp Metals

(SVM) - Get Report

is engaged in the acquisition, exploration, and development of silver related mineral properties in China and Canada.

According to the company's Website, Silvercorp is the largest primary silver producer in China through the operation of the four silver-lead-zinc mines at the Ying Mining Camp in the Henan Province of China.

In November, the company signed an agreement to acquire a 70% interest in BYP gold-lead-zinc mine in the Hunan Province in China for $33 million. It recently raised over $100 million in an equity offering that would help fund the acquisition, development at the GC mine in China and development at the Silvertip property in British Columbia.

In the June-September quarter, revenues grew 45% to $36.3 million. Profits jumped 33% to 8 cents per share. The company produced 1.34 million ounces of silver, 17 million pounds of lead and 4 million pounds of zinc.

The company expects to produce 5.3 million ounces for the full year ending March 2011.

BMO Capital recently cut the stock to market perform from outperform with a price target of $13.25, according to


8. Concho Resources

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Concho Resources

(CXO) - Get Report

is a Texas-based independent oil and natural gas company, engaged in the acquisition, development, exploitation and exploration of producing oil and natural gas properties.

Its operations are focused in the Permian Basin of Southeast New Mexico and West Texas, the largest onshore oil and gas basin in the U.S.

The company swung to profit in the third quarter, reporting net income of $20.8 million compared to a net loss of $19.8 million in the year ago quarter. Production rose 36% to 3.9 MMBoe (million barrels of oil equivalent).

The company forecasts production to grow to 22.5 to 23 MMBoe in 2011 from an estimated 15 MMBOE in 2010.

Earlier this year, the company acquired

Marbob Energy

for $1.65 billion. The acquisition was financed by $1.3 billion debt.

Moody's recently issued a negative outlook for the company, because too much of its assets are financed by debt. Still, it maintained its non-investment grade, speculative rating of B1, as the company had a track record of reducing its debt following acquisitions and on the assumption that Concho will not buy more companies in 2011 and plunge itself further into debt.

Concho recently said it intends to offer at least 2.3 million shares, with plans to use the proceeds from the sale to repay part of the oil-and-gas producer's outstanding balance under its credit facility.

12 out of 22 analysts rate it a buy or outperform, 9 rate it a hold.

7. Brigham Exploration

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Brigham Exploration

( BEXP) engages in the exploration, development, and production of onshore oil and natural gas reserves in the Rocky Mountains, the Gulf Coast, the Anadarko Basin and west Texas.

Brigham beat analyst expectations in the third quarter, reporting a profit adjusted for extraordinary items of $18 million, or 15 cents per share, versus a loss in the corresponding period of $300,000. Analysts expected an adjusted profit of 10 cents per share.

Production jumped 64% in the third quarter to 8,509 barrels of oil equivalent a day. High value crude oil accounted for 75% of the production. Brigham expects total average production of 10,200-10,800 barrels of oil equivalent (boe) per day. The company also raised its full-year exploration and development capital budget by 15 percent to $466.1 million.

The updated 2010 budget will fund approximately 44.8 net Williston Basin wells, two net Vicksburg wells in South Texas and 2.8 net wells primarily in the West Texas Wolfberry oil resource play.

Brigham recently reported above-average production rates from its five new wells in the oil-rich formation in the Bakken region located in North Dakota and Montana.

13 out of 18 analysts rate it a buy. MKM Partners recently downgraded the stock to neutral from buy with a 12-month price target of $31. Jefferies had a buy rating in November with a price target of $32. Analyst Subhash Chandra says the fourth quarter guidance looked conservative. "Based on 18 gross completions, midpoint of 8,100 bopd appears conservative. We currently estimate production of 8,400 bopd. Our revised EPS estimate of $0.25 is considerably above consensus of $0.15."

6. Stillwater Mining

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Stillwater Mining


is engaged in the development, extraction, processing, refining and marketing of palladium, platinum and associated metals from a geological formation in south central Montana and from the recycling of spent catalytic converters. It is the only producer of palladium and platinum in the U.S.

According to a recent investor presentation, Stillwater has proven resources of 20.6 million ounces of platinum and palladium. The company produced 364,000 ounces of platinum and palladium in the first nine months of 2010.

Stillwater sells 70% of mined platinum and 80% of mined palladium under a long-term supply agreement with


(F) - Get Report

due to expire in 2010. But the company says a highly liquid platinum and palladium market exists outside of contracted arrangements and that it is not imperative that the Ford agreement be replaced.

Norimet, its majority shareholder

sold its entire holding in the company recently. Norimet, a subsidiary of Russian mining giant MMC Norilsk Nickel, decided earlier this year to exit its holding as it did not have operational control and wanted to focus on its core operations.

5. NovaGold Resources

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M&A activity in gold mining stocks took off in 2010 and shares of


(NG) - Get Report

have skyrocketed on the prospect of it being a takeout target for larger miners.

The stock has also attracted the interest of big investors including George Soros and John Paulson, owning a combined 33 million shares.

NovaGold is considered an attractive target because it's a junior with big properties. The company has two of the largest gold and copper deposits in the world -- Donlin Creek and Galore Creek -- as well as the two smaller properties of Rock Creek and Ambler.

>>Will NovaGold Take a Buyout Offer

"You've got a very, very low cost gold producer with a silver and gold byproduct credit so naturally that would fit nicely into any major companies portfolio. We're obviously aware that that's a possibility,"

CEO Rick Van Nieuwenhuyse told



NovaGold is expected to release a prefeasibility study for Galore in 2011 and Donlin has the potential to produce 25 million ounces of gold. The two properties, however, won't come on stream until 2015 at the earliest.

4. Energy XXI

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Energy XXI


is engaged in the acquisition, development, exploration and production of oil and natural gas reserves in the U.S. Gulf Coast and the Gulf of Mexico.

Energy XXI is among the top picks of fund manager Patrick Gundlach, who manages

Marshall Small Cap Growth Fund



Reserves and production have soared, Gundlach told


recently, as management focuses on its core oil assets, combined with some recent acquisitions. Energy XXI in November announced the acquisition of $1 billion in oil and gas assets from

Exxon Mobil

(XOM) - Get Report

, which will take the company's production from 26,000 barrels of oil equivalent per day to about 46,000.

Gundlach contends this growth will be sustained through its continued focus on core properties, and the effective exploitation of the newly acquired assets.

"Energy XXI's growth stands to improve even more via its exploratory program in the shallow-water-ultra-deep play with

McMoRan Exploration


," says Gundlach. "Production is slated to commence from the Davy Jones discovery by the end of 2011, and upcoming results from Blackbeard East and Lafitte could also be impactful."

MKM Partners recently upgraded the stock to a buy with a price target of $35.12 out of 16 analysts rate the stock a buy.

3. Silver Wheaton

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Silver Wheaton


is a leading silver streaming company.

About 70% of silver production comes as a by-product from base metal and gold mines. Silver stream agreements give the company the right to purchase a percentage of future by-product silver production from a mine that it does not own or operate in exchange for upfront payment. The company does not incur any capex or exploration costs.

"I think if silver prices stay strong our production trends upwards significantly over the next three years. This year we'll have about 23 million ounces of production. If we make no more acquisitions our production is at 40 million ounces a year in three years time. So if silver prices stay where they are I think you'll see a general trend upwards in our earnings and cash flows,"

CEO Peter Barnes told



The stock has been the biggest beneficiary of the rally in silver prices. Silver recently touched a 30-year high, sparking fresh interest in the precious metal. Bulls have been touting silver's industrial applications in addition to its value as a precious metal.

Silver Wheaton reported record earnings of $69.2 million, or 20 cents per share, in the third quarter, double the $33.6 million, or 11 cents a share, it reported a year earlier.

BMO recently upgraded the stock to an outperform from market perform and raised the price target to $46 from $40.

Barnes expects Silver Wheaton to raise production by almost 20% next year, and sales could get a further lift from higher prices. "Silver could go as high as $50 an ounce over the next three-four years ... and $30 easily in the next few months," Mr. Barnes, told



2. New Gold

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New Gold

(NGD) - Get Report

is an intermediate gold producer with a portfolio of global assets in the United States, Mexico, Australia, Canada, Chile and Brazil.

The company offers an indirect exposure to gold, silver and copper prices, three of the hottest commodities in 2010.

In the third quarter, New Gold reported a 44% jump in revenues of $127.1 million. Earnings from mine operations for the third quarter of 2010 more than doubled to $46.7 million from $22.6 million in 2009.

The company expects to produce between 330,000 and 360,000 ounces of gold in 2010 at a cash cost of $445 to $465 per ounce sold. It forecasts production to increase to over 400,000 ounces in 2012.

Six out of ten analysts rate the stock a buy.

1. Kronos Worldwide

YTD Returns:


Kronos Worldwide

(KRO) - Get Report

, a global producer and marketer of value-added titanium dioxide pigments, is the unexpected winner among commodity stocks so far in 2010.

Titanium Dioxide is a white pigment that finds application in consumer goods, paints and automotive coatings. Tight supplies have led to spiraling prices.


(DD) - Get Report

, the largest producer of the pigment, recently raised prices by $200 per metric ton, in a sign of growing pricing power in the market.

Kronos, too, recently announced a price hike of all titanium dioxide products sold in Europe and Turkey. Effective 2011, prices will increase by 200 euro per metric ton to 250 euro per metric ton, depending on the grade. This is in addition to previous increases.

Analysts at UBS recently reiterated a buy on the stock, but cut their target price to $25 from $27 earlier. Deutsche Bank also has a buy on the stock with a price target of $50.

The company recently announced a repurchase of 1 million shares in the open market. Steven L. Watson, Vice Chairman and Chief Executive Officer, said, "Kronos has continued to focus on maximizing its productive output in response to the current global shortage and favorable long term outlook for demand in the titanium dioxide industry. We believe our current and foreseeable liquidity position will allow us to expand the productive capacity of our facilities to their full practical limits and take advantage of appropriate expansion and acquisition opportunities which may occur in the future. "

-- Written by Shanthi Bharatwaj in New York

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