Investing in gold feels out of style, doesn’t it? You’d think that we’d forgotten how vital gold has historically been as an asset. It’s also a tangible asset, as opposed to digital currencies, for instance.
Now, let’s pretend for a moment that a recession is on its way. Bear with me…
In this context, gold mining stocks are a wise choice. While interest rate hikes from the Federal Reserve may pose challenges for pricing, last year showed us that instability fears can drive gold prices higher.
Given post-pandemic uncertainties, gold provides a recession-proof investment option…
Agnico Eagle Mines Ltd (AEM)
Agnico Eagle Mines (AEM) is a top Canadian gold mining company with a long-established history dating back to 1957. AEM operates mines in Canada, Finland, and Mexico, with exploration and development activities in several other countries. Despite some choppiness in the market this year, AEM’s shares have shown a nearly 8% increase in the trailing year. Financially, AEM presents an enticing case for gold stocks during a recession with its substantial profit margins, ranking in the top 86% of the industry.
AEM stock is up slightly by 1.85%, has a 0.54 beta score, a positive ROE (return on equity), a P/B (price to book) ratio of 1.32x, and a trailing twelve-month asset growth of 27.07%. For the current fiscal quarter, AEM is projected to report $1.7 billion in sales with an EPS of $0.55 per share and a 3-5 year EPS growth rate of 80.8%. At its latest earnings call, AEM defeated analysts’ EPS predictions, reporting $0.57 per share vs. $0.49 per share as expected, a 15.9% surprise. With an operating free cash flow of $2.24 billion, AEM also shows year-over-year growth in crucial areas like revenue (+13.88%), net income (+1425.82%), EPS (+1145.16%), and net profit margin (+1240.20%). AEM has a 3.02% annual dividend yield and a quarterly payout of 40 cents ($1.60/year) per share. With a 10-day average volume of 2.17 million shares, AEM has an average price target of $67.48, with a high of $75.13 and a low of $55; this represents a potential 42% leap from its current pricing. AEM has 18 buy ratings and two hold ratings.
Wheaton Precious Metals Corp (WPM)
Wheaton Precious Metals (WPM) stands out as one of the top gold mining stocks to consider due to its predictability and reliability as a metals streaming enterprise. Unlike traditional miners, WPM provides upfront cash to miners in exchange for a predetermined share of the metal production, reducing investment volatility. Financially, WPM exhibits consistent profitability, with a trailing-year net margin of 64.23%, surpassing 95.1% of the metals and mining industry. Additionally attractive for investors, WPM boasts a three-year sales growth rate of 34.2%, outperforming 78.96% of its sector peers.
WPM has a very safe 0.46 beta score, is trading around the middle of its existing 52-week range, and is up year-to-date by 14.12%. WPM has a PEG (price/earnings/growth) ratio of 2.77x, a positive SMA (simple moving average), a positive ROE, and positive asset growth of 6.77%. For the current quarter, WPM is projected to report $256.7 million in sales at $0.29 per share, with a 3-5 year EPS growth rate of 24.4%. WPM has an annual dividend yield of 1.34%, with a quarterly payout of 15 cents ($0.60/year) per share. With a 10-day average volume of 1.59 million shares and almost $500 million in free cash flow, WPM has a
median price target of $56.12, with a high of $62 and a low of $41; this indicates a possible 39% price jump from where it currently sits. WPM has 13 buy ratings and five hold ratings.
Rio Tinto PLC (RIO)
Rio Tinto (RIO) presents an intriguing opportunity for those seeking a balanced risk-reward profile in gold mining stocks. As a stalwart in resource extraction, RIO boasts a market cap of over $107 billion and significant relevancies beyond gold. While shares have experienced an 11% decline since the beginning of the year, they have shown a nearly 10% increase in the past 365 days. RIO offers value, with a net margin of 22.31%, surpassing 86% of the field. RIO’s profitability contributes to its impressive dividend, particularly relative to its pricing. This compelling combination makes RIO an excellent gold mining stock to consider.
RIO’s stock is down year-to-date by 3.08%, is trading near the bottom of its existing range (which leaves room for growth), and has a surprisingly volatility-safe beta measure of 0.73. RIO has a positive ROE (return on equity), a P/S (price to sales) ratio of 2.02x, and a P/B (price to book) ratio of 2.23x. For the current fiscal quarter, RIO is expected to show an EPS of $3.96 per share, quarterly EPS growth of 34.97%, and a 3-5 year EPS growth rate of 21.4%. RIO has a free cash flow of $7.36 billion and a 10-day average trading volume of 2.61 million shares. With a 13.17% annual dividend yield, RIO distributes a quarterly payout of $2.27 ($9.08/year) per share and a generous 89.75% payout ratio. As assigned by analysts, RIO has a median price target of $76.85, with a high of $92 and a low of $74; this suggests a potential price upside of 33.3%. RIO has three buy ratings and one hold rating.
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