The softer U.S. dollar has been a boon for gold futures lately, with the yellow metal starting this week by skyrocketing to a new record high around $2,130 per ounce. Gold for February delivery (GCG24) is cooling its heels in today's session as the safe-haven asset continues to consolidate some of those heady gains - but amid aggressive buying by central banks, many analysts are calling for sustained upside into 2024.
This surge has sparked interest in gold mining stocks, whose financial results are closely tied to commodity prices. But with gold futures pulling back from all-time highs, the big question is: which gold stocks are worth buying for additional upside?
Here's a look at three top-rated stocks have at least 20% upside potential over the next year, according to Wall Street - and all three offer solid dividends for yield seekers, too.
Agnico Eagle Mines: A Dividend Giant North of the Border
Agnico Eagle Mines (AEM) is a Toronto-based gold producer with a diverse array of top-notch mining assets spread across Canada, Finland, and Mexico, alongside exploration activities in the U.S. and Latin America.
In recent years, Agnico Eagle Mines has grown into a global gold mining powerhouse. The 2021 merger with Kirkland Lake Gold strengthened its strategic positioning in Canada, and further expanded its footprint in its gold-rich home base by securing Canadian assets from Yamana Gold.
Zoom in on AEM's stock, and the shares are roughly flat YTD - but in the past month, they've rallied about 10% on strength in gold futures.
Income investors should note that AEM offers a fat dividend for shareholders, with a 3% forward yield, and a dividend history stretching back to 1983.
Agnico Eagle Mines has crushed consensus estimates in four out of the last five quarters, with an average upside surprise of 9.91%. In the third quarter of 2023, earnings per share (EPS) checked in at a stronger-than-forecast $0.44. Looking ahead to fiscal 2024, analysts are predicting 12.68% EPS growth to $2.40.
The mean price target is an optimistic $65.28, signaling a potential 27% upside from current levels. Analysts are practically cheering – 9 out of 12 are screaming "strong buy," with three more giving a solid “moderate buy” nod.
Barrick Gold: Canada's Leading Gold Producer
Agnico-Eagle's Toronto neighbor, Barrick Gold (GOLD), is a heavyweight in the gold mining game, with a $30 billion market cap and exploration and development projects spanning five continents. In fact, Barrick is Canada's largest gold producer - and based on the most recent annual data, they're continuing to grow reserves and resources of both gold and copper at a staggering pace.
Barrick Gold stock has lagged on a year-to-date basis, off 2% since the start of 2023, despite a roughly 10% rally over the last month.
That said, the dividend yield now stands north of 2%. And with a 57.14% payout ratio, they're keeping enough stashed away for future growth.
When it comes to earnings, Barrick Gold is no slouch. They've beaten earnings estimates in the last four quarters, surprising to the upside by an average margin of 15.41%. In Q3 2023, EPS rose 20% to $0.24.
Looking ahead, the forecast from analysts is sunny for FY 2024, with 38.27% EPS growth projected.
The mean price target for GOLD is $22.11, implying expected upside of 31% from current levels. Out of 16 analysts tracking the stock, eight are screaming "strong buy," three are shouting "moderate buy," and five give it a "hold."
Newmont Corporation: Newcrest Acquisition Unlocks Value
Colorado-based Newmont Corporation (NEM) is another big shot in the North American gold mining world, holding a bag of assets across Nevada, Peru, Australia, and Ghana, and boasting a market cap of $31.57 billion. The company just completed its acquisition of Newcrest, which is expected to generate $500 million in annual pre-tax synergies and $2 billion in cash improvements through portfolio optimization within the first two years.
Taking a peek at NEM stock in 2023, the shares have rallied nearly 12% in the past month - but they're still down nearly 17% on the year. NEM offers shareholders a forward dividend yield of 4%.
Newmont missed on both the top and bottom line in its most recent earnings report, as EPS of $0.36 fell short of expectations and the company lowered its full-year production guidance, with results impacted negatively by a strike at one of its Mexico mines.
However, Wall Street is targeting an average 44% EPS improvement for NEM in the year ahead.
The mean price target of $53.59 suggests an expected 36% upside from current levels. Analysts call it a “moderate buy" overall, with nine “strong buys,” one “moderate buy," and six “holds.”
