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Gold Stocks: 4 Stocks To Consider In Your Portfolio
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Last Updated on: 7th February 2020, 10:50 pm
What for recent market volatility and uncertainties surrounding the trajectory of the global economy, gold is very much on the upside. The glittering metal has enjoyed a bullish market as of late, with the price of gold projected to climb even higher in the coming months. Savvy investors know that gold has historically performed well during times of uncertainty. Here are 4 gold stocks to include in your portfolio.
Kirkland Lake Gold Ltd. (KL)
Kirkland Lake Gold Ltd. (KL) is certainly proving itself to be one of the top gold stocks to have in a diversified portfolio. The Toronto, Canada-based gold producer has seen its share price increase more than 3,000% since 2015.
Kirkland Lake Gold has increased gold production from 314,000 ounces in 2016, to 974,615 ounces in 2019. For 2020, the company is targeting between 950,000 to 1,000,000 ounces. It should be noted that despite the increased growth, Kirkland Lake Gold has succeeded in lowering production costs. Over the past year, all-in costs decreased by 21%.
The gold producer has five producing mines in total. It operates two of the planet’s highest grade and lowest-cost mining operations – the Macassa Mine located in Ontario, Canada and the Fosterville Mine found in Victoria, Australia. All of its mines are quality assets, proving highly profitable with significant exploration potential, which will drive future growth. Moreover, Kirkland Lake Gold enjoys an exceptional financial position, with free cash flow last quarter reaching $181.3 million. As of September 30, 2019, the company had a cash balance of $615 million with no debt.
On January 31, 2020, Kirkland Lake Gold completed its acquisition of Detour Gold Corporation (DGC) for a reported $4.34 billion.
Sibanye-Stillwater (SBGL) is one of the leading precious metals mining producers in the world. The company has mining operations in South Africa and the US, in addition to exploration properties in both North and South America. In addition to being a leading gold and rhodium producer, Sibanye-Stillwater is the largest producer of platinum in the world and the second-largest producer of palladium.
In 2019, Sibanye-Stillwater’s shares soared an astounding 251%, making it one of the top precious metals stock performers. The company is involved in the production of a variety of precious metals, reducing its amount of risk should there be a decline in the price of one of those metals. Sibanye-Stillwater could make a good addition to a diversified portfolio.
Franco-Nevada Corporation (FNV)
Franco-Nevada Corporation (FNV) is a streaming and royalties company, with stakes in precious metals, oil, and gas. Yet, the company is very much gold-focused, with 80% of its revenue coming from gold, silver, and platinum group metals (PGMs).
Franco-Nevada neither owns mines, nor conducts exploration or develops projects. Instead, it provides the capital in return for a royalty on whatever the mining operation produces, or rights to a stream of precious metal or oil supply. Because of its large, and diversified portfolio, Franco-Nevada has upside exposure but little of the downside potential that producers are faced with when there is a decrease in the price.
Franco-Nevada is the largest streaming company in the world, with a market cap of $25.76 billion. It has been hugely profitable, and since its IPO over a decade ago, it has increased dividends eleven consecutive years. Moreover, Franco-Nevada maintained its dividend growth and outperformed the gold price after it plunged. In 2019, the company saw gains of 40%.
Agnico Eagle Mines LTD. (AEM)
Agnico Eagle Mines LTD. (AEM) has been a gold producer since 1957, and has been a global leader in the gold mining sector. The company operates mines and conducts exploration in Canada, Mexico, and Finland. In addition, it has exploration activities in the US and Sweden.
In the third quarter of 2019, Agnico Eagle saw record gold production at several of its mining operations – 476,937 ounces in total. Conversely, in the third quarter of 2018, production was 422,000 ounces. For 2019, the company expects to produce 1,750,000 ounces of gold.
The company expects to increase production by 30% through to 2021, and saw a significant increase in cash flows. Free cash flow generation drove a 40% increase in dividend. Cash provided from the company’s mining activities was a record $349.2 million. Comparatively, in the third quarter of 2018 cash from operating activities was $465.4 million.
For the past 22 years, Agnico Eagle has consistently outperformed the price of gold and gold equities. Since 1998, the company has seen a compound annual growth rate of 12%. Likewise, its mining operations continue to exceed production targets. In 2018 alone, it produced 1.63 million ounces of gold, compared to its market guidance of 1.53 million ounces. That same year, Agnico Eagle also outperformed it cost guidance by approximately 2%.
Gold is enjoying a bullish market, and savvy investors know that investing in gold is an excellent diversification strategy to hedge against economic uncertainty. That’s why investing in gold through your IRA makes perfect sense. However, if you do choose this investment option, it is imperative to know the Gold IRA rules and regulations. As with any investment opportunity, it’s imperative to first do your due diligence and consult a financial professional before investing your hard-earned money.