Top Gold Stock Investment to Consider

In past and recent times, gold has proven to be a credible asset, especially in times of market crisis. The current Covid-19 crisis has not only led to the loss of jobs of millions of Americans but has also sent many investors running to gold as a safe haven for their investments. The current economic crisis caused by the Covid-19 pandemic has led to the increase in the price of gold, hitting $1,740 per ounce, for the first time since 2012.

Gold has risen to a multi-year high and many investors are racing after either investing in physical gold or gold stocks. Investing in gold now seems quite late for some investors, however, many other investors are optimistic that the prices of gold will continue to rise for as long as the coronavirus pandemic remains.

There are many performing gold stocks at the moment, considering that the whole gold market is doing well. Some top performers in the gold industry are Agnico Eagle Mines Ltd. (NYSE: AEM), Royal Gold (NASDAQ: RGLD), and Newmont Corporation (NYSE: NEM).

Agnico Eagles Mines Ltd

The Canadian-based company was founded in 1957, with a focus on mining silver, cobalt, and nickel. Agnico Eagle has since grown to be a global leader in the mining industry. In its Q1 2020 report, the company reported about 411,366 ounces of gold production, a 3.3% year-over-year. It also reported $163 million in cash from its operations, achieving an overall increase of 9% over the $149 million from a year ago.

Mining companies have to heavily rely on leverage in the execution and advance of their projects because of their capital-intensive nature in the development of projects. The Covid-19 pandemic has caused quite a few obstructions in the flow of mining in the mining industry. However, Agnico Eagle has managed to successfully maintain a good financial health in spite of the on-goings in the economy. Still, in its Q1 report, the company reported a net debt-to-earnings before interest, taxes, depreciation, and amortization (EBITDA) ratio of 1.1.

The company’s outlook for Q2 is expected to be even better than the Q1 earnings. It noted in the Q1 earnings report that there are expectations to “generate significant free cash flow” given that the price of gold is currently high and the value of local currencies has weakened. In April, the company reduced its debt and it believes that the current situation of things will help it reduce more of its debts in the coming months.

Newmont Corporation

This mining company stands as the largest publicly traded gold-mining company by market cap, appealing mostly to ESG investors. Newmont’s operations span across three different continents including Africa, Australia, North America, and South America. Its wide-spread, geographically allows it to mitigate the risk of restrictions placed by local jurisdictions.

In its Q1 2020 earnings report, the company reported gold production of 1.5 million ounces. Despite the challenges and threats posed by the Covid-19 at the start of 2020, the company has been able to scale through. Newmont also reported a 63% year-over-year increase in adjusted EBITDA, and an increase in its cash flow, generating more than $600 million in free cash flow (a 75% increase over the same period of time the previous year).

Its dividend yield has caused the company to be even more appealing in the eyes of its investors. The company recently increased its dividend to $0.25 per share, a 79% increase over the amount it paid the previous year.

Royal Gold

A top player in assisting mining companies in developing projects, through the provision of upfront capital for a percentage of the asset’s mineral production in return. Some investors would rather invest in companies like the Royal Gold than directly in mining companies. An upside for companies like Royal Gold is that they are not subject to the risks associated with capital-intensive mining companies. Instead, their partnering with mining companies gives them access to purchasing metals at preset prices and other benefits that come with the partnership.

In its last quarterly reports, Royal Gold reported revenue of $136.4 million, amid the Covid-19 crisis. Its balance sheet also reflected a paid debt of $30 million in the last quarter, with a net debt-to-EBITDA ratio of 0.3.

Other gold stocks to consider in this quarter include stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio, gold stocks with the highest year-over-year (YOY) earnings per share (EPS), and gold stocks with the highest total return over the last 12 months.

Gold stocks with the lowest 12-month trailing price-to-earnings (P/E) ratio

Source: Ycharts

Barrick Gold Corp.: Barrick Gold Corp. is a Canadian mining company with a primary function of production and sale of gold and copper. The company operates several mines with development projects across Canada, Australia, Africa, South America, and the United States.

Kinross Gold Corp.: Kinross Gold Corp. is another Canada-based gold mining company that deals with the exploration, development, and production of gold. Its operations spread across Canada, Russia, Chile, Ecuador, Ghana, Mauritania, and the US. In January, it was announced by the company that it had completed its acquisition of N-Mining Ltd, high quality development in Russia.

Alacer Gold Corp.: Alacer Gold is a mining company, primarily engaged in the mining, development, and exploration of minerals in Turkey. The company has announced its plans to merge with SSR Mining Inc. with the aim of producing a diversified entity which will boost free cash flow.

Gold stocks with the highest year-over-year (YOY) earnings per share (EPS)

Source: Ycharts

SSR Mining Inc.: SSR Mining Inc. is a Canada-based mining company which deals with the exploration and development of gold and silver mines. Its operations span across the Americas, Nevada, Canada, Saskatchewan, and Argentina. The company confirmed its plans to merge with Alacer Gold on May 11.

Gold stocks with the highest total return over the last 12 months

Source: Ycharts

DRDGold Ltd.: This mining company mainly focuses on the operation of underground mines and surface-retreatment in South Africa. It also owns underground mines across South Africa. The company has made known its plans to resume operations as soon as possible following the slowed-down infection rates of the Covid-19 virus in the country.

Liberty Gold Corp.: Liberty Gold Corp is a Canadian gold exploration company that operates through wholly-owned properties – ‘Black Pine’ and ‘Goldstrike’ located in Idaho and Utah, respectively.

Belo Sun Mining Corp.: This Canada-based company primarily deals with mineral exploration and development. Its major area of focus is gold exploration and development of the Volta Grande advanced-stage development project located in northern Brazil.