Market conditions such as the current bring forth some nice investment opportunities despite the widespread instability. Fear is running wild capitalizing on the economic and geopolitical scourges — that are going all biblical on everything and everybody. At times of such volatility, history has proven precious metals to be a safe haven, particularly gold and gold stocks. The recent hike in the U.S. Dollar owing to the Federal Reserve’s policy tightening against inflation did muddy the water for gold and similar commodities. However, USD seems to be stabilizing somewhat and the outlook for gold remains bullish. Thus, while the stock market is in bear territory, the best stocks for gold are more likely to do better than most.
Since owning physical gold is expensive and complicated, gold stocks are one’s best bet to hedge against volatile and tumulus times. Hence, we have compiled a list of the top 5 gold stocks for investors ready to expand their portfolios and make some gains in the long run.
Barrick Gold Corp. (GOLD)
The first gold stock on our list is Barrick Gold Crop. (GOLD). Based in Canada, Barrick Gold explores, develops, and produces as well as sells gold and copper properties. Its operating mines and projects span over 18 countries, including Africa, Papua New Guinea, Saudi Arabia, and North and South America.
Barrick Gold is continuously expanding its operations to ensure sustainable production and profits. It is currently working on a two-phased, 7-billion-dollar investment in Riko Diq, one of the world’s largest undeveloped copper-gold deposits in Pakistan. While the feasibility studies are still underway, it is estimated that Reko Diq could yield around 400,000 tons of gold per year.
Barrick Gold’s financial performance is another reason to keep it in one’s portfolio. As per its Q2 earnings report, GOLD had total sales of $2,859 million with earnings of $488 million. Total gold production for the quarter was 1.04 million ounces which are expected to increase throughout the rest of 2022.
Barrick Gold also boasts a dividend yield of 2.6%, which is well above the S&P 500’s 1.6%. Its quarterly dividend in 2022 has been 20 cents per share so far. Moreover, the company’s play includes large mines with significant resources in order to be able to produce gold at a steady pace for the years to come. A further push for its profits comes from its focus on cost reduction. Given its strong balance sheet, business expansion plans, and cost-reduction strategy, GOLD’s profits are more likely to increase over the years. Add its 22.56% 3-month decline to the mix and you get one of the best stocks for gold to invest in right now.
Agnico Eagle Mines (AEM)
Next on our list of safe-haven stocks to help you navigate the rough waters is another Canadian gold player, Agnico Eagle Mines (AEM). AEM is a top-tier gold miner with operations in Canada, Mexico, as well as in the U.S. Interestingly, this gold play distinguishes itself from the rest through its longstanding policy of not selling its future gold production forward.
Having completed its merger with Kirkland Lake Gold earlier this year, the behemoth is now said to have a 48-million-ounce gold reserve on top of an intriguing production pipeline. The merger-related synergies are expected to drive its payable gold production from 2 million ounces in 2021 to the range between 3.2-3.4 million ounces in each of the next three years — with a further stable cost decline in 2023-2024. This could potentially support Agnico Eagle’s future dividend payouts while the current dividend yield is just shy of 4% — a staggering one at that.
These aren’t the only reasons for us to list AEM as one of the best stocks for gold, as the company also boasts a very strong financial profile. The latest quarterly financials of the company reported a humungous year-over-year increase of 60.6% of its revenues of $1,581.1 million. Its earnings rose to $275.8 million with quarterly gold production of 858,170 ounces — that’s a 71% increase in production from the comparable quarter.
Thus, with a swollen dividend, strong financials, and huge operational efficiencies, Agnico Eagle is most certainly one of the best gold stocks to buy — that is still down over 15% year to date.
Franco-Nevada Corporation (FNV)
Next is yet another Canada-based stock, Franco-Nevada Corporation (FNV). FNV, unlike the others so far, is a gold-focused royalty and streaming company operating internationally. Through its financial services, it has managed to build up 405 assets throughout the world. Moreover, the latest financing endeavor of the company involves a gold project in Brazil.
Franco-Nevada’s model is the most risk-free gold play on our list so far since it utilizes both royalty and streaming models. Its highly diversified nature and spread of assets allow the company to reduce execution risk around projects. This also ensures that the company is not reliant on any one asset for revenue, but on many relatively less risky countries in the mining world — other than the Americas region.
The company reported a nice 10% increase in its revenue and adjusted earnings last quarter and had $1.7 billion in available capital — yet another reason for FNV being on our list today. What’s more that its balance sheet was free of debt at the end of the quarter and its overall financial profile is quite strong. Furthermore, over the past five years, the company has delivered an exceptional net income growth of 37%. As per estimates, Franco-Nevada’s return on equity is around 12%, which is pretty good compared to the industry average of 9.9%.
Thus, combining its numerous positive components with a share price that is down over 13.7% in one year, FNV holds a high rank among our best stocks for gold list.
Wheaton Precious Metals Corp. (WPM)
Next is, unbelievably so, once again a Canadian firm, Wheaton Precious Metals Corp. (WPM). Being one of the largest precious metal streaming companies, Wheaton has a portfolio of interests in 23 operating mines and 13 development projects.
Its streaming model not only allows it to mitigate forward ambiguities and foster cost predictability but also helps it make tons of money. Wheaton’s various streaming contracts enable it to buy gold at $451/ounce on average through 2025. This is pennies compared to gold’s recent trading price of $1,792/ounce. This results in a big operating cash flow for the company — meaning a growing dividend and new investments. Wheaton was able to increase its dividend by 25% over the past year, thanks to higher precious metals prices. The company offers a dividend yield of 1.8% and has been increasing it steadily since 2015.
WPM is on track to achieve its current-year production of 700,000 to 760,000 Gold Equivalent Ounces, while it produced 752,958 Gold Equivalent Ounces in 2021. The anticipated gold production for 2022 is somewhere between 350,000 ounces to 380,000 ounces. This is a good range compared to last year’s 342,546 ounces. Currently, Wheaton trades at a P/E ratio of 19.5, the lowest it has traded at in half a decade, which makes it all the more attractive.
Hence, its highly profitable streaming model, wide reach combined with financial and production profile gives us a great gold play to buy right now — the cherry on top, the stock is down over 19.2% year to date.
Gold Fields (GFI)
The final stock on our list, finally breaking the Canadian stock streak, is a gold stock that some might disagree with, due to its pending Yamana takeover. Gold Fields (GFI) is one of the largest gold mining firms in the world, with its geopolitical status as its core advantage — being based in South Africa. Given the ongoing crisis, even just from the geopolitical stance, GFI seems very interesting. The company’s mining operations stretch well beyond its home market to the Americas, Australia, and West Africa.
GFI recently announced plans for acquiring Canada’s Yamana Gold in an all-share deal valuing Yamana at $6.7 billion. Many see the proposed takeover as a heavy price for no foreseeable gains. However, the company has been trying to sweeten the deal with a higher dividend promise and a TSX listing. The company seems very confident in the deal, voting on which is expected in October. If successful, the deal will undoubtedly create a top-four global gold major with a diversified portfolio.
Moreover, Gold Fields also enjoys strong financials with the upcoming headline earnings for the first half of 2022 to be 24-33% higher year-over-year. Increasing 9% year-over-year, the first half attributable to gold equivalent production is anticipated to be 1,201 Koz. While its balance sheet has scope for improvement, GFI’s profitability metrics are impressive. Its operating margin is 37.4% against the industry median of 6.9%. In addition, its ROE is 20.5% against the sector median, which is in the negative territory. Thus, while there is some speculation about its ongoing Yamana deal, GFI has much to offer nonetheless and is a good bargain with its beaten-down price.
Conclusion
The current market conditions and geopolitical & economic instability have once again brought about a favor towards gold and gold stocks — the safe haven in tumulus times. Further paving the path for gold plays is the relative stability of the U.S. Dollar in recent days. While owning physical gold is still very risky, investing in gold stocks on the other hand is the best remedy for these times. Hence, each of the gold stocks mentioned in this list is the most suitable one to invest in right now — particularly due to their strong profile components.
