Federal Reserve's recent rate cuts have fueled the economy and thus boosted the gold market. The gold market is further poised to prosper with changing economic dynamics and geopolitical tensions in the Middle East.
Against this backdrop, it could be wise to buy fundamentally sound gold stocks AngloGold Ashanti plc (AU), Agnico Eagle Mines Limited (AEM), and Barrick Gold Corporation (GOLD) for portfolio safety.
Gold remains constant as a safe haven asset amid market volatility and economic downtrends, keeping its demand high among investors. Recently, the U.S. inflation data raised hopes of a rate cut next month, restraining the dollar below recent highs, and increasing gold demand stemmed from the geopolitical concerns in the Middle East lifting the bullion.
Last week, spot gold rose 1.1% to $2,658.42 per ounce, and U.S. gold futures were up 1.4%, settling at $2676.30. Also, the gold market is currently benefiting from the ongoing rising tensions in the Middle East, which has boosted bets for further U.S. interest rate cuts.
During the second quarter, with increasing mine production and recycling, total gold supply grew 4% year-over-year to 1,258.2 tonnes. Also, total gold supply was 1% higher year-over-year at 2,441t, driven by 2% growth in mine production. Recycled gold volumes in the second quarter increased 4% from the prior year.
Expanding gold production capabilities in mining areas, supply-demand dynamics, and current geopolitical factors are propelling the market growth. As per IMARC Group, the global gold market is expected to reach 3460.71 Tons by 2032, expanding at a CAGR of 1.6%.
Amid this, demand for gold continues to jump and attract investors' attention. Its quality to act as a hedge against inflation and growth potential poises the mining industry for long-term growth and protects your portfolio.
Given these conducive industry trends, let’s delve into the fundamentals of the top three Miners - Gold stocks, beginning with number 3.
Stock #3: AngloGold Ashanti plc (AU)
AU operates as a gold mining company internationally. The company primarily explores for gold and produces silver and sulphuric acid as by-products. Its flagship property is a 100% owned Geita mine located in the Lake Victoria goldfields of the Mwanza region in north-western Tanzania.
AU’s forward EV/EBITDA of 5.19x is 42% lower than the industry average of 8.96x. Likewise, the stock’s forward non-GAAP P/E multiple of 9.98 is 40.3% lower than the industry average of 16.72. Similarly, its forward EV/EBIT of 7.87x is 45.7% lower than the industry average of 14.49x.
During the second quarter that ended June 30, 2024, AU’s revenue from product sales increased 19.2% from the year-ago value to $1.38 billion. The company's gross profit grew 84.6% year-over-year to $467 million. Its profit for the period and EPS totaled $262 million and $60, compared to a loss for the period of $81 million and $20 per share during the prior year’s quarter, respectively.
In addition, the company’s adjusted EBITDA increased 92.1% year-over-year to $684 million, and its free cash flow was $183 million for the quarter.
Analysts expect AU’s EPS for the fiscal year (ending December 2025) to grow 27.9% year-over-year to $3.48. The company’s revenue for the same year is expected to increase 11.3% year-over-year to $6.27 billion. Shares of AU have soared 12% over the past six months and 43.6% over the past year to close the last trading session at $27.18.
AU’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.
AU has an A grade for Growth. The stock also has a B grade for Quality. It is ranked #13 in the list of 42 stocks within the B-rated Miners - Gold industry.
To check other POWR Ratings of AU for Sentiment, Value, Momentum, and Stability, click here.
Stock #2: Agnico Eagle Mines Limited (AEM)
Headquartered in Toronto, Canada, AEM engages in the exploration, development, and production of precious metals. The company’s mines are located in Canada, Australia, Finland, and Mexico, and they have exploration and development activities in Canada, Australia, Europe, Latin America, and the United States.
On June 24, AEM announced the acquisition of 33,821,842 common shares of Maple Gold Mines Ltd. on June 21, 2024, for a price of $0.085 per common share for a total consideration of approximately $2.87 million from several sellers that acquired the common shares in connection with an offering of flow-through common shares issued by Maple.
The share purchase brought AEM’s holding to 74,674,257 common shares, representing around 19.9% of the issued and outstanding common shares.
For the second quarter, which ended June 30, 2024, AEM’s revenues from mining operations increased by 20.9% from the year-ago value to $2.08 billion. The company’s adjusted net income came in at $535.27 million and $1.07 per share, reflecting increases of 68.2% and 64.6% year-over-year, respectively. Its adjusted EBITDA stood at $1.18 billion, up 32.9% year-over-year.
Also, the company’s free cash flow rose 86.7% from the year-ago value to $557.24 million.
Street expects AEM’s revenue for the third quarter (ended September 2024) to grow 28.3% year-over-year to $2.11 billion, while its EPS is expected to increase 123.4% year-over-year to $0.98, respectively. Further, it topped the consensus revenue and EPS estimates in all of the trailing four quarters.
Over the past six months, AEM’s stock has surged 28.9% and 67.1% over the past year to close the last trading session at $79.46.
AEM’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
AEM has a B grade for Growth and Sentiment. The stock is ranked #11 among the 42 stocks in the B-rated Miners - Gold industry.
To check other POWR Ratings of AEM for Value, Quality, Momentum, and Stability, click here.
Stock #1: Barrick Gold Corporation (GOLD)
Based in Toronto, Canada, GOLD is in the exploration, mine development, production, and sale of gold and copper properties worldwide. The company has ownership interests in producing gold mines in Argentina, Canada, Côte d’Ivoire, the Democratic Republic of Congo, the Dominican Republic, Mali, Tanzania, and the U.S.
On October 2, GOLD announced the development of a Super Pit at its Lumwana copper mine, officially launched by the Zambian President, His Excellency Hakainde Hichilema, accompanied by members of his cabinet. The feasibility study for the Super Pit Expansion will be carried out by the end of the year, paving the way for construction to start in 2025.
Once it is completed, the $2 billion project unlocks the potential to transform Lumwana into a long-life, high-yielding, top-25 copper producer and a Tier One copper mine.
GOLD’s revenues increased 11.6% year-over-year to $3.16 billion for the second quarter that ended June 30, 2024. The company’s adjusted net earnings were $557 million and $0.32 per share, up 65.8% and 68.4% from the prior year’s quarter, respectively. Its attributable EBITDA rose 30.5% from the year-ago value to $1.29 billion.
Analysts expect GOLD’s revenue and EPS for the third quarter (ended September 2024) to increase 20.6% and 43.4% year-over-year to $3.45 billion and $0.34, respectively. Also, the company has surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past six months, the stock has surged 10.8% and 31.3% over the past year to close the last trading session at $19.99.
GOLD’s robust outlook is projected in its POWR Ratings. The stock has an overall grade of B, translating to a Buy in our proprietary rating system.
The stock has a B grade for Sentiment and Quality. It is ranked #10 out of 42 stocks within the same industry.
To see the other ratings of GOLD for Growth, Value, Stability, and Momentum, click here.
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AEM shares fell $0.50 (-0.63%) in after-hours trading Monday. Year-to-date, AEM has gained 48.33%, versus a 24.09% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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