At first glance, the notion of gold stocks to buy for a hedge against inflation seems counterproductive. After all, the Federal Reserve threw just about everything and the kitchen sink at the problem. As well, Fed Chair Jerome Powell recently stated that we’re in the very early stages of disinflation. While he recognized the many challenges ahead, at least some light at the end of the tunnel materialized.
Or so you thought. Although the yellow metal took a sharp dip in recent sessions, it’s still very much elevated for the year. Further, gold stocks to buy benefit from key fundamental catalysts. First, a robust labor market translates to more dollars chasing after fewer goods. That right there represents the classic definition of inflation.
Second, we’re going full circle with China-related dynamics again imposing hardships on the global economy. While the Chinese government’s decision to reopen met much praise, it also presents a conundrum. Greater economic activity means more resource consumption. And that means higher crude oil prices. Therefore, don’t give up on gold stocks to buy. The party’s just getting started.
|WPM||Wheaton Precious Metals||$43.07|
|AEM||Agnico Eagle Mines||$51.64|
Centerra Gold (CGAU)
A Canadian mining firm, Centerra Gold (NYSE:CGAU) owns and operates the Mount Milligan copper-gold mine in British Columbia, Canada, and the Öksüt gold mine in Turkey. Not surprisingly, due to the rapid expansion of the spot gold price, Centerra benefitted handsomely this year. Since the January opener, CGAU gained over 24% of equity value.
Nevertheless, CGAU represents a relative value in the charts. During the trailing year, shares stumbled over 20%, though this metric is improving significantly because of recent momentum. On the financials, investors can still pick up a discount on Centerra. Currently, the market prices CGAU at a trailing multiple of 6.28. As a discount to earnings, Centerra ranks better than 70.86% of the competition.
Turning to Wall Street, covering analysts peg CGAU as a consensus moderate buy. Most recently, CIBC reiterated its hold assessment, though it targets shares hitting $7.84, implying 17.65% upside potential. On average, the consensus price target stands at $7.65, up nearly 15% from the time of writing. Thus, it makes for an intriguing case for gold stocks to buy.
Based in Greenwood Village, Colorado, Newmont (NYSE:NEM) is the world’s largest gold-mining firm. In addition to the yellow metal, Newmont mines copper, silver, zinc and lead. Surprisingly, NEM didn’t post a positive return this year. Since the Jan. opener, shares slipped 2.5%, which is unusual for major gold stocks to buy.
As well, in the trailing year, NEM lost more than 23% of equity value. Still, the red ink may attract speculators seeking a discount. According to Gurufocus.com’s proprietary calculations for fair market value (FMV), the business rates as significantly undervalued.
Objectively, prospective buyers should consider the company’s three-year free cash flow (FCF) growth rate of 30.2%. This ranks higher than 76.34% of the industry. As well, Newmont commands solid profitability margins. Presently, Wall Street analysts peg NEM as a consensus moderate buy. Moreover, their average price target stands at $55.88, implying upside potential of over 15%. Thus, it’s easily one of the gold stocks to buy.
Barrick Gold (GOLD)
A gold and copper producer, Barrick Gold (NYSE:GOLD) features 16 operating sites in 13 countries. Per its public profile, in 2019, Barrick produced 5.5 million ounces of gold at all-in sustaining costs of $894 per ounce and 432 million pounds of copper at all-in sustaining costs of $2.52 per pound.
Since the Jan. opener, GOLD stock managed to swing higher to the tune of nearly 3%. Admittedly, that’s not the greatest performance. At the same time, in the trailing year, shares stumbled “only” 7%. Therefore, it’s one of the more stable gold stocks to buy for hedging against inflation.
Currently, Barrick enjoys an overall solid financial profile. For instance, its three-year FCF growth rate stands at 49.3%, outpacing 91.78% of its rivals. Moreover, its book growth rate during the same period pinged at 25.2%, ranking well above the sector average. Perusing Wall Street’s opinion, experts peg GOLD as a consensus strong buy. Also, their average price target stands at $21.87, reflecting over 19% upside potential. Again, it’s one of the intriguing gold stocks to buy.
Wheaton Precious Metals (WPM)
A multinational metals streaming company, Wheaton Precious Metals (NYSE:WPM) offers better pricing predictability because of its business model. In exchange for upfront capital, streaming companies purchase all or part of the metals produced by a mining company. Because the terms are already specified in the contract, WPM tends to be one of the better gold stocks to buy during volatile cycles.
So far, it’s living up to its reputation. Since the Jan. opener, WPM gained almost 8% of equity value. In the trailing year, shares moved up over 5%. Granted, it’s not a profoundly amazing performance. However, WPM was in the black while other gold stocks to buy floundered in the red.
To be fair, Gurufocus.com warns that WPM may be modestly overvalued. Still, you’re getting a great package for the premium. Operationally, Wheaton delivers double-digit revenue growth. On the bottom line, its net margin of 72% obliterates the competition. Plus, it enjoys excellent stability in the balance sheet to boot. Wall Street analysts peg WPM as a consensus strong buy. Their average price implies upside potential of nearly 20%, making it one of the gold stocks to buy.
Agnico Eagle Mines (AEM)
Based in Toronto, Canada, Agnico Eagle Mines (NYSE:AEM) is a gold producer in Finland, Mexico and its home country. Further, its exploration and development activities extend to the U.S. To be sure, Agnico Eagle cuts a riskier profile among gold stocks to buy. Since the January opener, AEM dipped almost 2% of equity value.
Nevertheless, in the trailing year, AEM gained 6.5%, undergirding optimism for prospective investors. Currently, Gurufocus.com states that AEM represents a fairly valued business. Objectively, it might be running a rich premium to earnings. However, the company’s three-year growth rate stands at 16.6%, outpacing 73.42% of sector rivals. On the bottom line, Agnico’s net margin pings at 10.36%, outhustling nearly 69% of its peers. Further, the company enjoys a decently stable balance sheet.
Turning to Wall Street, analysts peg AEM as a consensus strong buy. In addition, their price target stands at $63.23, implying upside potential of 20%. Therefore, it’s a great idea for gold stocks to buy against inflation.
Sibanye Stillwater (SBSW)
Probably one of my favorite gold stocks to buy to discuss, Sibanye Stillwater (NYSE:SBSW) has always been relevant. Beyond the subject matter of this discussion, Sibanye also specializes in platinum group metals; namely, platinum and palladium. With Russia-sourced commodities effectively out of the picture for the west, Sibanye will likely only grow in relevance.
Nevertheless, the market doesn’t appreciate the longer-term implications of geopolitics. Frankly, that’s wild. In the year so far, SBSW dropped nearly 5% of equity value. During the past 365 days, Sibanye saw an erosion of 32% in the charts. Financially, the company cuts an attractive profile. Currently, the market prices SBSW at a forward multiple of 3.88. This rates much lower than the sector median of 14.25 times. Operationally, Sibanye’s three-year revenue growth rate stands at 38%. And its net margin is over 13%. Both stats rank above their respective sector median values.
Wall Street analysts peg SBSW as a consensus moderate buy. However, there’s nothing moderate about its price target of $15, which implies upside potential of 45%.
Another Canadian mining firm, B2Gold (NYSEAMERICAN:BTG) owns and operates gold mines in Mali, Namibia and the Philippines. A popular entity among gold stocks to buy, since the January opener, BTG gained over 3% of equity value. And in the trailing year, shares actually moved into positive territory, albeit by the slimmest of margins.
Per Gurufocus.com’s proprietary FMV calculations, B2Gold rates as a modestly undervalued investment. Objectively, BTG’s price-to-projected FCF ratio pings at 0.76 times. In contrast, the sector median value is 1.46 times.
Operationally, B2Gold’s three-year revenue growth rate stands at 16.4%, outpacing 72.47% of its rivals. As well, the company’s FCF growth rate during the same period pings at 20.1%, above 65.14% of the industry. Further, B2Gold commands strong profitability margins, especially its operating margin of over 30%. Looking to Wall Street, analysts peg BTG as a consensus strong buy. Further, their average price target of $5.57 implies upside potential of almost 47%.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.