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Deutsche Bank gives top mining picks

A dump truck is prepared to unload ore into a crusher at Freeport McMoRan's Grasberg copper and gold mining complex in Papua province, Indonesia.
Dadang Tri | Bloomberg | Getty Images

Deutsche Bank on Monday upgraded three stocks in the metals and mining sector to buy from hold, citing strength in the commodities complex and improving fundamentals.

"YTD commodity price improvements and equity issuances have resulted in much stronger balance sheets," wrote equity analyst Jorge Beristain, pointing to a 12 percent rally in metals and mining commodity prices last quarter.

"While the sector has further to go, balance sheets have improved, allowing companies greater options," wrote Beristain, estimating that $27 billion of capital market activity has been announced or completed year to date among those metals and mining firms in Deutsche Bank's coverage universe.

In the coming quarters, the analyst believes a combination of equity issuance, extension of debt maturities and improving cash flow will lure investors into the space.

Here are the three stock picks from Deutsche Bank: