Stocks were slightly lower in early trading today as Wall Street anticipated the July Federal Reserve meeting minutes which are scheduled for release at 2pm ET. Investors will be looking for clues on the timeline for the inevitable tapering of asset purchases by the central bank.
Investing in precious metals often seems to be reduced to two options. You can either buy physical gold/silver – the simpler, less risky option but often with the lowest returns, or invest in specific mining companies – which requires significant research and generally carries more risk.
There is another option that you might not have considered — royalty companies. On the spectrum of risk for precious metal investing, royalty companies fall somewhere between metal and miner. But when it comes to returns, gold royalty companies have been outperforming for quite some time.
Over the past seven years royalty and streaming companies have outperformed greatly in both bull and bear markets. An index of five major precious metals royalty and streaming companies greatly outperformed gold and the GDX over the past seven with a return of 135% versus gold’s return of 49% and the GDX’s return of 60%.
In today’s trade we’ll discuss one of the most compelling precious metal royalty investment opportunities available.
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Royalty Gold (NYSE:RGLD) is one of the leading precious metals royalty companies in the world. The Denver based company holds around 200 producing, development, evaluation and exploration stage properties in some of the world’s most prolific mining regions in North America, South America and Africa.
The company’s proven business model generates strong cash flow and high margin with a low cost structure. As a result RGLD notched record financial performance for fiscal year 2021 and strong financial results and record revenue for Q4.
In their August 11th call the company reported fourth quarter results of $168 million in revenue and EPS of $1.04, beating the consensus EPS forecast of $0.93 by 12%.
In 2021 the company reported record revenue of $614.9 million up 23% year over year, and earnings of $302.5 million which is a 52% increase from 2020 numbers. Royal Gold reported operating cash flow of $407.2 million, closing the year debt free, with net cash of $222 million and available liquidity of $1.2 billion.
“Not only did we produce record financial results, but we also achieved several significant strategic goals in fiscal 2021,” commented Bill Heissenbuttel, President and CEO of Royal Gold.
Despite record earnings, Royal Gold’s share price is only 2.5% higher than where it started the year which seems like an attractive level to initiate for those looking to invest in gold royalties. The median consensus price target of $145.00 represents a 28% increase over the next twelve months.
Where to invest $1,000 right now...
Before you consider buying Royal Gold, you'll want to see this.
Investing legend, Keith Kohl just revealed his #1 stock for 2022...
And it's not Royal Gold.
Jeff Bezos, Peter Thiel, and the Rockefellers are betting a colossal nine figures on this tiny company that trades publicly for $5.
Keith say’s he thinks investors will be able to turn a small $50 stake into $150,000.
Find that to be extraordinary?
But you have to act now, because a catalyst coming in a few weeks is set to take this company mainstream... And by then, it could be too late.
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