When constructing an investment portfolio, it’s common for investors to focus on particular assets or strategies. However, those with a long-term perspective could prioritize diversification to mitigate potential instability. Gold is often seen as a reliable diversifier, offering protection against various risks and economic uncertainties.
To hedge against current economic and geopolitical risks, investors might consider fundamentally sound gold mining stocks Agnico Eagle Mines Limited (AEM), Barrick Gold Corporation (GOLD), and Kinross Gold Corporation (KGC).
Gold's appeal as a safe haven asset remains strong. This year, gold has surged by 12% year-to-date, surpassing most major asset classes. The impressive performance is attributed to several factors: central banks continue their buying spree, Asian investors remain active, consumer demand stays robust, and geopolitical tensions persist.
Sabrin Chowdhury, head of commodities analysis at BMI, highlighted that this year, gold is poised to reach new heights. "Gold thrives from uncertainty," Chowdhury remarked, emphasizing the peak levels of uncertainty in 2024, driven by elections, ongoing conflicts, and escalating Middle Eastern tensions.
Concurrently, gold prices have recently hit new highs, with forecasts predicting the metal could reach $3,000 per ounce next year. Analysts anticipate further records reflecting gold's continued attraction amid economic uncertainty.
In parallel, the World Gold Council reported a notable 4% increase in total gold supply for the second quarter compared to the previous year. The rise was fueled by record-breaking mine production of 929 tons and a 4% increase in recycling rates. Data for the second quarter shows a 3% year-over-year increase in mine production, setting a new record for this period.
As demand for gold continues to climb, driven by its role as a secure investment and its critical applications in various industries, the gold mining sector is poised for significant growth. Given the industry’s positive trends, let’s dive deep into the fundamentals of three Miners – Gold stocks, beginning with #3.
Stock #3: Agnico Eagle Mines Limited (AEM)
AEM, headquartered in Toronto, Canada, explores, develops, and produces precious metals. The company’s portfolio includes mines such as Canadian Malartic Complex, Detour Lake, Fosterville, Goldex, Kittila, La India, LaRonde Complex, Macassa, Meadowbank Complex, Meliadine, and Pinos Altos.
On June 24, AEM announced its acquisition of 33,821,842 common shares of Maple Gold Mines Ltd. at $0.085 per share, amounting to a transaction valued at approximately $2.87 million. The strategic investment is poised to enhance AEM's portfolio diversification and bolster its growth trajectory in the mining sector, facilitating broader market expansion.
During the fiscal 2024 second quarter that ended June 30, 2024, AEM’s revenues from mining operations grew 20.9% year-over-year to $2.08 billion. Its adjusted EBITDA increased 32.9% from the year-ago value to $1.18 billion.
In addition, the company’s adjusted net income of $535.27 million and $1.07 per share indicate a rise of 68.3% and 64.6% from the prior year’s quarter, respectively. Furthermore, the company’s free cash flow increased 86.8% year-over-year to $557.24 million.
Analysts expect AEM’s revenue and EPS for the third quarter (ending September 2024) to grow 27.5% and 108.9% year-over-year to $2.09 billion and $0.92, respectively. Also, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
Shares of AEM have gained 22.3% over the past three months and 64.7% over the past year to close the last trading session at $79.10.
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 and Growth. It is ranked #12 out of 42 stocks in the B-rated Miners – Gold industry.
To check other POWR Ratings of AEM for Quality, Value, Momentum, and Stability, click here.
Stock #2: Barrick Gold Corporation (GOLD)
Headquartered in Toronto, Canada, GOLD is involved in the exploration, mine development, production, and sale of gold and copper properties. Also, the company has ownership interests in producing gold mines in Argentina, Canada, Côte d’Ivoire, the Democratic Republic of Congo, the Dominican Republic, the United States, and more.
On July 9, GOLD underscored its substantial economic contribution to Mali, having invested over $10 billion in the economy over 29 years. With its mines consistently contributing between 5% and 10% of the country’s annual GDP, GOLD has directly injected over $1 billion into the economy in the past year alone.
Moreover, GOLD’s pioneering benefit-sharing model, initially developed for its Tanzanian operations, has been successfully replicated at the reopened Porgera mine in Papua New Guinea. This demonstrates GOLD's ability to not only sustain but also enhance its operational impact while fostering sustainable economic development in multiple regions.
On May 1, Barrick Gold (International Holdings) Ltd., a subsidiary of GOLD, unveiled its exploration earn-in agreement with Geophysx Jamaica Ltd., a private mineral exploration company, for specific properties in Jamaica. The agreement grants GOLD access to approximately 4,000 square kilometers of consolidated land positions across the country.
The geological potential mirrors that of the Dominican Republic, home to GOLD's successful Pueblo Viejo mine, positioning GOLD to leverage its expertise and expand its footprint in promising new territories.
During the fiscal 2024 second quarter that ended June 30, 2024, GOLD’s revenues increased 11.6% year-over-year to $3.16 billion. Its attributable EBITDA rose 30.5% from the year-ago value to $1.29 billion.
Moreover, the company’s adjusted net earnings and adjusted net earnings per share grew 65.8% and 68.4% from the prior year’s quarter to $557 million and $0.32, respectively.
Street expects GOLD’s revenue for the third quarter ending September 2024 to increase 29.8% year-over-year to $3.72 billion. Meanwhile, its EPS is expected to increase 49.5% from the previous year’s period to $0.36 for the quarter. Moreover, the company has topped the consensus EPS estimates in all of the trailing four quarters.
Shares of GOLD have gained 18.5% over the past nine months and 23% over the past year to close the last trading session at $19.76.
GOLD’s robust fundamentals are reflected in its POWR Ratings. 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 #9 in the list of 42 stocks within the same industry.
Click here to check out additional GOLD ratings for Growth, Value, Stability, and Momentum.
Stock #1: Kinross Gold Corporation (KGC)
Based in Toronto, Canada, KGC acquires, explores, and develops gold properties. The company operates several mines, including Fort Knox and the Manh Choh project in Alaska, as well as Round Mountain and Bald Mountain mines in Nevada and the Paracatu mine in Brazil.
On September 10, KGC completed a Preliminary Economic Assessment (PEA) for the Great Bear project, validating its strategy to acquire a top-tier, high-margin operation in a stable jurisdiction with robust infrastructure.
The project anticipates an annual production exceeding 500,000 ounces over the initial 8 years, achieving an all-in-sustaining cost (AISC) of approximately $800 per ounce through a conventional 10,000 tonne per day mill.
The project's combination of high-margin production and modest capital requirements positions it favorably within KGC's portfolio strategy. With strong economic fundamentals and promising growth prospects, Great Bear represents a compelling opportunity for KGC to strengthen its market position and generate sustainable value in the mining sector.
During the fiscal 2024 second quarter that ended June 30, 2024, KGC’s metal sales rose 11.6% year-over-year to $1.22 billion. Its operating earnings grew 25.4% from the year-ago value to $298.30 million.
Additionally, adjusted net earnings attributable to common shareholders came in at $174.70 million, increasing 4.2% year-over-year, while adjusted EPS stood at $0.14.
The projected consensus for revenue and EPS stands at $1.22 billion and $0.16, respectively, marking a modest year-over-year increase of 10.2% in revenue and 32.9% in EPS for the fiscal third quarter ending September 2024. Moreover, the company surpassed the consensus revenue and EPS estimates in all four trailing quarters.
Shares of KGC have gained 22% over the past three months and 90.6% over the past year to close the last trading session at $9.15.
KGC’s sound fundamentals are mirrored 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 and Sentiment. It is ranked #6 out of 42 stocks in the Miners – Gold industry.
Click here to view KGC's additional POWR Ratings for Momentum, Value, Growth, and Stability.
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 rose $0.31 (+0.39%) in premarket trading Thursday. Year-to-date, AEM has gained 46.99%, versus a 17.38% rise in the benchmark S&P 500 index during the same period.
About the Author: Aanchal Sugandh
Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program. She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.
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