The global demand for gold remains robust with its historical importance, financial stability, and its appeal as a safe haven asset. During economic uncertainties as well, investors look for a resilient investment prospect, such as gold. The recent economic uncertainties and geopolitical concerns have highlighted gold as an even better alternate.
Given the industry’s shiny prospects, investors could consider buying fundamentally sound gold stocks Agnico Eagle Mines Limited (AEM), Barrick Gold Corporation (GOLD), and Kinross Gold Corporation (KGC) to invest with significant upside.
In times of persistent level of inflation and market downturns, investors seek to invest in resilient assets such as gold, emerging as a reliable hedges. Gold has performed remarkably in 2024, outpacing various asset classes, growing by 12% year-to-date, benefiting from continued central bank buying, Asian investment flows, resilient consumer demand, and geopolitical uncertainty.
Despite a stronger dollar and higher bond yields, Gold prices gained again recently, with investors looking forward to the U.S. June inflation data and hoping for data on the U.S. interest rates. Spot gold rose 0.2% to $2,363.64 per ounce as of 14:35 p.m. on Tuesday. Also, the U.S. gold futures settled about 0.2% higher to $2,367.90.
Also, Bank of America Corporation analysts project that gold could soar to $3,000 per ounce in the next 12-18 months, driven by gold's status as a long-term asset, hedge against inflation, and effective portfolio diversifier.
Further, when it comes to gold demand, the jewelry industry topped the market, accounting for a 48.7% share in the global gold demand during the previous year, amounting to about 2,168 metric tons. After jewelry market, investment, central bank reserves, and its use in technology hails in the global gold demand. The gold production in 2023 was about 3,000 metric tons.
In light of these encouraging trends, let’s look at the fundamentals of the three best Miners - Gold stocks, beginning with number 3.
Stock #3: Agnico Eagle Mines Limited (AEM)
Headquartered in Toronto, Canada, AEM is engaged in the exploration, development, and production of precious metals. The company explores for gold. Its mines are located in Canada, Australia, Finland and Mexico, having exploration and development activities in Canada, Australia, Europe, Latin America, and the United States.
On June 24, AEM acquired 33,821,842 common shares of Maple Gold Mines Ltd. on June 21, 2024 at a price of $0.085 per common share for total consideration of about $2.87 million from several sellers that acquired the common shares in connection with an offering of flow-through common shares issued by Maple.
Post the share purchase, AEM owns 74,674,257 common shares, representing around 19.9% of the issued and outstanding common shares.
For the first quarter that ended March 31, 2024, AEM’s gold production grew 8.1% from the year-ago value to 878,652 ounces. Its adjusted net income came in at $377.50 million and $0.76 per share, up 39.1% and 31% year-over-year. The company’s adjusted EBITDA of $929.30 million indicate growth of 25.5% year-over-year.
Furthermore, the company’s free cash flow came in at $395.60 million, up 49.4% from the prior year’s quarter.
Analysts expect AEM’s revenue and EPS for the second quarter (ended June 2024) to grow 17.2% and 23.4% year-over-year to $2.01 billion and $0.80, respectively. Moreover, the company surpassed the consensus revenue and EPS estimates in all of the trailing four quarters.
Over the past six months, AEM’s stock has surged 36.1% and 41.9% over the past year to close the last trading session at $70.20. Wall Street analysts expect the stock to hit $78.69 in the near term, indicating a potential upside of 12.09%.
AEM’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
AEM has a B grade for Sentiment. It is ranked #17 out of 41 stocks in the Miners - Gold industry.
To check other POWR Ratings of AEM for Quality, Growth, Value, Momentum, and Stability, click here.
Stock #2: Barrick Gold Corporation (GOLD)
Based in Toronto, Canada, GOLD is in the exploration, mine development, production, and sale of gold and copper properties internationally. The company has ownership interests in producing gold mines in Argentina, Canada, Côte d’Ivoire, the Democratic Republic of Congo, the Dominican Republic, Mali, Tanzania, and the U.S.
On May 1, GOLD’s subsidiary Barrick Gold (International Holdings) Ltd. entered an exploration earn-in agreement with Geophysx Jamaica Ltd. The agreement provides GOLD with access to approximately 4,000 square kilometers of consolidated land positions in Jamaica.
The strategic agreement aligns well with GOLD’s operations, enhance its exploration capabilities and delivering new world-class discoveries.
On April 25, GOLD’s Nevada Gold Mines celebrated the official opening of its new underground mine, Goldrush. The Goldrush Project is on track to produce 130,000 ounces of gold in the current year, furthering the value of Nevada Gold Mines. Barrick owns 61.5% of the project through the NGM joint venture with Newmont (38.5%).
During the first quarter that ended March 31, 2024, GOLD’s revenues increased 3.9% year-over-year to $2.75 billion. The company’s adjusted net earnings grew 34.8% and 35.7% from the year-ago value to $333 million and $0.19 per share, respectively. Its attributable EBITDA rose 6.6% from the prior year’s quarter to $907 million.
In addition, the company’s free cash flow was $32 million for the quarter. The company’s cash and equivalents and total assets came in at $3.94 billion and $45.84 billion as of March 31, 2024, respectively.
Analysts expect GOLD’s revenue for the second quarter (ended June 2024) to grow 15.1% year-over-year to $3.26 billion, and its EPS is expected to increase 31.9% year-over-year to $0.25 for the same quarter. Moreover, the company surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past month, the stock has surged 7.6% and 5.5% over the past year to close the last trading session at $17.44. Wall Street analysts expect the stock to hit $22.92 in the near term, indicating a potential upside of 31.42%.
GOLD’s POWR Ratings reflect its robust outlook. The stock has an overall grade of B, translating to a Buy in our proprietary rating system.
GOLD has a B grade for Sentiment and Quality. It is ranked #5 in the list of 41 stocks within the Miners - Gold industry.
To see the other ratings of GOLD for Growth, Value, Stability, and Momentum, click here.
Stock #1: Kinross Gold Corporation (KGC)
Headquartered in Toronto, Canada, KGC engages in the acquisition, exploration, and development of gold properties. It operates various mines including the Fort Knox mine and the Manh Choh project in Alaska; the Round Mountain and the Bald Mountain mines in Nevada, the U.S.; the Paracatu mine in Brazil; and the La Coipa and the Lobo-Marte project in Chile.
On May 8, KGC’s Board of Directors declared a dividend of $0.03 per common share for the first quarter of 2024. The dividend was paid on June 13, 2024, to shareholders of record as of the close of business on May 30, 2024. KGC pays an annual dividend of $0.12, which translates to a yield of 1.40% at the current share price. Its four-year average dividend yield is 2.03%.
In terms of forward EV/EBITDA, KGC is trading at 5.85x, 30.2% lower than the industry average of 8.38x. Likewise, the stock’s forward EV/EBIT multiple of 12.84 is 1.2% lower than the industry average of 12.99. Also, its forward Price/Cash Flow of 5.84x is 34.4% lower than the industry average of 8.90x.
During the first quarter that ended March 31, 2024, KGC’s metal sales rose 16.4% year-over-year to $1.08 billion. The company's operating earnings grew 34.2% from the year-ago value to $193.20 million. Adjusted net earnings attributable to common shareholders came in at $124.90 million and $0.10 per share, up 42.6% and 42.8% year-over-year, respectively.
Also, the company’s adjusted free cash flow increased 204% year-over-year to $145.30 million.
Analysts expect KGC’s revenue and EPS for the third quarter (ending September 2024) to increase 10.2% and 3.3% year-over-year to $1.22 billion and $0.12, respectively. Furthermore, it has topped the consensus revenue and EPS estimates in each of the trailing four quarters.
Shares of KGC have gained 53.4% over the past six months and 78.6 % over the past year to close the last trading session at $8.59. Wall Street analysts expect the stock to hit $9.46 in the near term, indicating a potential upside of 10.13%.
KGC’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
KGC has a B grade for Quality, Sentiment and Value. It is ranked #4 out of 41 stocks in the same industry.
To check other POWR Ratings of KGC for Momentum, Growth, and Stability, click here.
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
AEM shares were trading at $73.10 per share on Wednesday afternoon, up $2.90 (+4.13%). Year-to-date, AEM has gained 35.18%, versus a 18.58% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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