Many investors have a love or hate relationship with gold. But there's little debate that as a store of value, few asset classes compare to the time-honored benefit of owning gold. More hotly debated benefits of gold are its role as a hedge against inflation and whether it has intrinsic (i.e., monetary) value.
To the concept of being a hedge, the record of gold is mixed. However, there is an entire generation of investors who have not experienced inflation of the type that the United States experienced in the 1970s. From 1971 to 1974, an ounce of gold increased in price from $35 to $180. And from 1978 to January 1980, the yellow metal climbed all the way to $850.
But on the latter, gold investors will point to gold's essential role as an insurance policy. Because if a country's fiat currency is compromised due to inflation, investors will begin to seek the safety of hard assets. That explains why, despite the Federal Reserve keeping interest rates at historically low levels between 2008 and 2022, the price of gold soared.
Many gold investors enjoy buying the physical metal in the form of bars or coins. But for many investors, buying gold stocks can provide exposure without the reciprocal costs of taking physical custody of gold. This presentation will give you seven gold stocks that you should consider to provide an anchor in your portfolio in good times or bad.
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- Newmont
- Barrick Gold
- Agnico Eagle Mines
- Wheaton Precious Metals
- Franco-Nevada Corporation
- Royal Gold
- Centerra Gold
#1 - Newmont (NYSE:NEM)
Leading off this list of gold stock is Newmont Corp. (NYSE: NEM). This is one of the largest gold miners by market capitalization and it has 96 million ounces of gold reserves. Newmont also has an investment grade balance sheet with a liquidity buffer of $7.3 billion. And the company has returned over $6.7 billion to shareholders since its acquisition of Goldcorp in 2019.
Newmont did show a decline in earnings in 2022 but is expected to post average earnings growth of approximately 10% in the next five years. That would go a long way to supporting the company’s dividend that currently pays a yield of 3.3%. A contributing factor will be the company’s free cash flow (FCF). Newmont’s FCF came in around $1.1 billion in 2022 but could easily be around $2 billion as gold prices hover around $2,000 an ounce.
Analysts tracked by MarketBeat give NEM stock a Moderate Buy rating with a price target of $62.80 which would be a 29% increase from the stock’s price as of the market close on March 29, 2023.
About Newmont
Newmont Corporation engages in the production and exploration of gold. It also explores for copper, silver, zinc, and lead. The company has operations and/or assets in the United States, Canada, Mexico, Dominican Republic, Peru, Suriname, Argentina, Chile, Australia, Papua New Guinea, Ecuador, Fiji, and Ghana.
Read More - Current Price
- $38.28
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 9 Buy Ratings, 7 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $54.31 (41.9% Upside)
#2 - Barrick Gold (NYSE:GOLD)
Back in the 1980s, the car rental company Avis had the slogan “we try harder” in relation to their #2 position in the market. That may be a good way to describe Barrick Gold Corp. (NYSE: GOLD). Newmont may be the leader in the sector, but Barrick has a plan to become the leader over time.
Specifically, Barrick puts its focus on operating what it defines as “Tier One” mining assets. These are companies that can produce more than 500,000 ounces of gold per year, have an operating life of at least 10 more years, and have a low-cost operation as defined by total costs per ounce.
With this focus on Tier One assets, Barrick expects to produce an average of 6.5 million ounces every year. The miner currently has six Tier One assets and had 76 million ounces of gold reserves at the end of 2022.
About Barrick Gold
Barrick Gold Corporation is a sector-leading gold and copper producer. Its shares trade on the New York Stock Exchange under the symbol GOLD and on the Toronto Stock Exchange under the symbol ABX.
In January 2019 Barrick merged with Randgold Resources and in July that year it combined its gold mines in Nevada, USA, with those of Newmont Corporation in a joint venture, Nevada Gold Mines, which is majority-owned and operated by Barrick.
Read More - Current Price
- $15.46
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 7 Buy Ratings, 5 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $24.82 (60.5% Upside)
#3 - Agnico Eagle Mines (NYSE:AEM)
The third company on this list also happens to be the third-largest gold producer. At the end of 2022, Agnico Eagle Mines Ltd (NYSE: AEM) had 48.7 million ounces of gold reserves. The company has six active projects to go along with an exploration pipeline that includes three advanced-stage projects.
Like many mining companies, Agnico Eagle Mines reported lower year-over-year earnings per share even as YOY revenue was higher in every quarter. But as the environment for mining becomes more favorable, 2023 is likely to be a better year for the company.
Analysts agree. Agnico Eagle has a Buy rating among the six analysts that report to MarketBeat. The price target of $59.20 is approximately 14.5% above the current AEM stock price. Along with that, Agnico has a proven track record of delivering added value for its shareholders. The company has issued a dividend for the last 39 years and has an attractive dividend yield of 3.09%.
About Agnico Eagle Mines
Agnico Eagle Mines Limited, a gold mining company, exploration, development, and production of precious metals. It explores for gold. The company's mines are located in Canada, Australia, Finland and Mexico, with exploration and development activities in Canada, Australia, Europe, Latin America, and the United States.
Read More - Current Price
- $78.16
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 7 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $86.78 (11.0% Upside)
#4 - Wheaton Precious Metals (NYSE:WPM)
Wheaton Precious Metals Corp. (NYSE: WPM) is on this list because of its business model. Wheaton doesn’t have a mining operation. Instead, it finances the mining operations of other companies in exchange for the right to buy some of the mined gold at a pre-determined (and discounted) price per ounce. This provides cost predictability for shareholders. And it’s also reflected in the company’s profit margin of over 60%.
Another benefit of investing in Wheaton is the company’s access to high-quality assets. As of March 2023, the company had 20 active mining projects with 12 additional projects in development. In the company’s March 2023 presentation to shareholders, it announced that 93% of its production “comes from assets that fall in the lowest half of the cost curve.” The company also expects 30 years of mine life based on its proven and probable reserves.
Wheaton has approximately $1 billion in operating cash flows generated at current spot prices. That’s significant for many reasons, including its dividend. Specifically, 30% of the average of the previous four quarters’ operating cash flows is paid to shareholders in the form of a dividend.
About Wheaton Precious Metals
Wheaton Precious Metals Corp. primarily sells precious metals in North America, Europe, and South America. It produces and sells gold, silver, palladium, and cobalt deposits. The company was formerly known as Silver Wheaton Corp. and changed its name to Wheaton Precious Metals Corp. in May 2017. Wheaton Precious Metals Corp.
Read More - Current Price
- $57.11
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 9 Buy Ratings, 1 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $71.67 (25.5% Upside)
#5 - Franco-Nevada Corporation (NYSE:FNV)
The last of the large-cap stocks on this list is another gold streaming company. Franco-Nevada Corporation (NYSE: FNV) is headquartered in Toronto, Canada. Although the company has a diversified portfolio of precious metals, iron ore and oil and gas companies, it still generated 55% of its revenues from gold in 2022.
From a fundamental perspective, Franco-Nevada has no debt on its balance sheet, a fact that sets it apart from many companies in the mining industry. That along with the company’s streaming model has allowed it to pay a dividend every year since the company went public in 2008.
The company beat expectations on the top and bottom lines in its fourth quarter 2022 earnings report. And the company is expected to show year-over-year earnings growth in 2023. Analysts give FNV stock a Hold rating and suggest that the stock is at the top end of its projected growth. That being said, Raymond James reiterated its rating for the stock and while it lowered its price target it still has a $157 price target which would be a gain of almost 10% from its current level.
About Franco-Nevada
Franco-Nevada Corporation operates as a gold-focused royalty and streaming company in South America, Central America, Mexico, the United States, Canada, and internationally. It operates through Mining and Energy segments. The company manages its portfolio with a focus on precious metals, such as gold, silver, and platinum group metals; and engages in the sale of crude oil, natural gas, and natural gas liquids through a third-party marketing agent.
Read More - Current Price
- $116.21
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 7 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $145.33 (25.1% Upside)
#6 - Royal Gold (NASDAQ:RGLD)
With a market cap of just over $8 billion, Royal Gold, Inc. (NASDAQ: RGLD) is the mid-cap stock on this list of gold stocks. And you’ll begin to notice a theme because like the prior two stocks, Royal Gold has a streaming business model that offers investors more predictability regarding revenue and earnings.
The company operates over 180 properties in twelve countries. And 73% of Royal Gold’s revenue comes from gold. One area where Royal Gold stands out is its commitment to delivering sharholder value. The company doesn’t offer a particularly impressive dividend yield at 1.17%. However, it’s managed to raise its dividend for the last 21 consecutive years. That’s an impressive testament to the resiliency of the company’s business model.
And analysts tracked by MarketBeat give the stock a $140 price target which is a 9.6% increase from the RGLD stock price as of this writing.
About Royal Gold
Royal Gold, Inc, together with its subsidiaries, acquires and manages precious metal streams, royalties, and related interests. The company engages in acquiring stream and royalty interests or to finance projects that are in production, development, or in the exploration stage in exchange for stream or royalty interests, which primarily consists of gold, silver, copper, nickel, zinc, lead, and other metals.
Read More - Current Price
- $133.81
- Consensus Rating
- Hold
- Ratings Breakdown
- 4 Buy Ratings, 5 Hold Ratings, 1 Sell Ratings.
- Consensus Price Target
- $165.43 (23.6% Upside)
#7 - Centerra Gold (NYSE:CGAU)
The last gold stock on this list is Centerra Gold, Inc. (NYSE: CGAU). This is a small-cap miner with a market cap of just $1.42 billion as of March 2023. The company has two active gold and copper mines and two additional projects under development. One of those projects will be for molybendum.
2022 was a difficult year for investors. Revenue and earnings showed a decline as did the CAGU stock price which fell 32.5% for the year. That highlights the speculative nature of investing in a small-cap miner. At the same time, if the company hits analysts forecasts for 14% revenue growth in 2023, it should be enough to reverse the downward trend in the stock.
Investors can also take comfort in the company’s balance sheet which is not overly burdened with debt. The company’s debt-to-EBITDA ratio is just 0.25% which is well below the median for the sector.
About Centerra Gold
Centerra Gold Inc, a gold mining company, engages in the acquisition, exploration, development, and operation of gold and copper properties in North America, Turkey, and internationally. The company explores for gold, copper, and molybdenum deposits. Its flagship projects are the 100% owned Mount Milligan gold-copper mine located in British Columbia, Canada; and the Öksüt gold mine located in Turkey.
Read More - Current Price
- $5.69
- Consensus Rating
- Moderate Buy
- Ratings Breakdown
- 3 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
- Consensus Price Target
- $11.00 (93.3% Upside)
The stocks listed in this presentation were part of the Gold Stocks page that every investor can find for free on MarketBeat.com. For deeper insight, MarketBeat All-Access subscribers can take advantage of our Stock Screener tool and look at the best gold stocks based on specific criteria such as market capitalization, analyst ratings, and favorable media coverage.
Another way to invest in gold is through an exchange-traded fund (ETF). These funds give you exposure to most, if not all, of the stocks in this presentation along with others. The ability to smooth out risk is appealing to many investors who may not have the inclination to pick their own stocks, or don't have a firm understanding of the overall sector.
Some attractive candidates as of March 2023 include the iShares Gold Trust Micro (NYSEARCA: IAUM), the FT Cboe Vest Gold Strategy Quarterly Buffer ETF (BATS: BGLD), and the GraniteShares Gold Trust (NYSEARCA: BAR).
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