3 Gold Mining Stocks to Buy for Portfolio Safety
The recent rate cuts by the Federal Reserve have injected optimism into the economy, subsequently boosting the gold market. With shifting economic dynamics and reigning geopolitical tensions in the Middle East, investing in fundamentally sound gold stocks could yield significant benefits for investors seeking portfolio safety. The gold market remains a reliable safe-haven asset amid market volatility and downturns, ensuring ongoing demand among investors. Recently released U.S. inflation data has raised expectations for additional rate cuts, causing a dip in the dollar’s performance and escalating gold demand due to heightened geopolitical tensions. Last week, spot gold prices surged by 1.1% to reach $2,658.42 per ounce, with U.S. gold futures climbing 1.4% to settle at $2,676.30. This bullish trend in the gold market can largely be attributed to the combination of rising geopolitical risks and expectations that the U.S. will continue to cut interest rates.
In Q2, the overall supply of gold experienced a 4% increase year-over-year, reaching 1,258.2 tonnes. This growth was fuelled by a 2% uptick in mine production and a 4% increase in recycled gold volumes compared to the previous year. With mining capabilities expanding and supply-demand dynamics shifting, the industry is prime for growth. According to the IMARC Group, the global gold market is forecasted to reach 3,460.71 tonnes by 2032, growing at a CAGR of 1.6%. As such, the prospects for gold mining stocks continue to attract investor attention and demonstrate their ability to hedge against inflation while promising robust growth potential. Below we discuss three top gold mining stocks to consider for your investment portfolio.
Stock #3: AngloGold Ashanti plc (AU)
AngloGold Ashanti operates as an international gold mining company that primarily explores for gold while producing silver and sulphuric acid as by-products. The flagship property of AU is its fully owned Geita mine located in the Mwanza region of northwestern Tanzania. With a forward EV/EBITDA of 5.19x, AU is 42% below the industry average of 8.96x. Moreover, its forward non-GAAP P/E ratio of 9.98 is 40.3% lower than the industry average of 16.72.
As of the second quarter ending June 30, 2024, AU’s revenue from product sales showed a significant increase of 19.2% year-over-year, amounting to $1.38 billion. The company’s gross profit soared by 84.6% year-over-year to $467 million, with a net profit of $262 million and an EPS of $60 compared to a loss of $81 million and an EPS of $20 in the previous year. Adjusted EBITDA climbed by 92.1% to $684 million with free cash flow reaching $183 million. Analysts forecast that AU’s EPS for the fiscal year ending December 2025 will grow by 27.9% year-over-year to $3.48, making it an attractive prospect. The stock has appreciated by 12% over the past six months and 43.6% over the past year, closing last session at $27.18. AU holds a POWR Ratings overall rating of B, indicating a Buy status, ranking #13 among 42 stocks in the B-rated Miners – Gold industry.
Stock #2: Agnico Eagle Mines Limited (AEM)
Headquartered in Toronto, Canada, Agnico Eagle engages in the exploration, development, and production of precious metals across its mining sites located in Canada, Australia, Finland, and Mexico. AEM recently acquired a substantial number of common shares of Maple Gold Mines Ltd., increasing its stake to approximately 19.9%.
For the quarter ended June 30, 2024, AEM’s revenue from mining operations rose by 20.9% year-on-year to $2.08 billion. The company’s adjusted net income was $535.27 million with an EPS of $1.07, illustrating increases of 68.2% and 64.6%, respectively. The adjusted EBITDA also improved by 32.9% to $1.18 billion. Analysts anticipate a 28.3% increase in AEM’s revenue for Q3 to $2.11 billion and a staggering 123.4% EPS increase year-over-year to $0.98. AEM has outperformed revenue and EPS consensus estimates for the last four quarters. Over the past six months, the stock has surged by 28.9%, closing last session at $79.46. AEM’s POWR Ratings indicate an overall rating of B, ranking #11 among the 42 stocks in the B-rated Miners – Gold segment.
Stock #1: Barrick Gold Corporation (GOLD)
Barrick Gold operates within the exploration, development, production, and sale of gold as well as copper properties on a global scale. Currently, the company boasts ownership interests in gold mines across several countries, including Argentina, Canada, and the U.S.
On October 2, 2024, GOLD announced a significant development: the launch of a Super Pit at the Lumwana copper mine, backed by the Zambian President. This $2 billion project, with a feasibility study set to complete this year, aims to unlock Lumwana’s potential as a Tier One copper mine.
For Q2, ending June 30, 2024, Barrick Gold reported a revenue increase of 11.6% year-over-year, amounting to $3.16 billion, with adjusted net earnings of $557 million and EPS of $0.32. Analysts estimate that the company’s revenue and EPS for Q3 will rise by approximately 20.6% and 43.4% year-over-year, respectively. GOLD’s stock has increased by 10.8% over the past six months, reaching $19.99. The stock maintains a POWR Ratings overall grade of B, indicating Buy status and ranking #10 out of 42 stocks in the B-rated Miners – Gold industry.
Given the current market landscape, investing in these three gold mining stocks—AngloGold Ashanti, Agnico Eagle Mines, and Barrick Gold Corporation—may provide both safety and growth opportunities for investors looking to enhance their portfolios.