Gold is typically a safe haven investment that offers stability during challenging economic conditions. The asset typically has a low correlation with the stock, bond, and crypto markets, so it’s prudent to invest in the best gold stocks now.
2022 was an incredibly tough year for financial markets. The S&P 500 dipped 19.4%, while the crypto market and 30-Year U.S. Treasury Bond futures shed 64% and 21.6% of their values in 2022. Conversely, the growth in the gold futures contract remained flat. These results reinforce my earlier point about the low correlation of yellow metals with capital markets. Having said that, the markets are still remarkably volatile, pushing the need for investments in safe-haven assets, including these best of the best gold stocks.
|AEM||Agnico Eagle Mines||$50.84|
|BVN||Compania de Minas Buenaventura||$8.35|
Best Gold Stocks: Newmont Corporation (NEM)
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Leading the list of best gold stocks is Denver-based Newmont Corporation (NYSE:NEM), one of the largest gold miners with a sparkling track record of producing growth across both lines. In addition to gold, it is also involved in producing other precious metals, including copper, silver, zinc, and lead.
The volatility in gold prices, the adverse economic climate, and the supply chain crisis last year resulted in negative top-line growth. However, it has done well to control costs and produce relatively strong margins on a trailing twelve-month basis. Additionally, it boasts a whopping $3.2 billion cash balance and a levered free cash flow margin of 11.6%, which points to its robust flexibility. Once gold prices start picking up the pace again, I expect NEM stock to follow and then some. Additionally, with 96 million ounces of proven reserves, Newmont has tremendous cash flow visibility through the decade.
Best Gold Stocks: Kinross Gold (KGC)
Kinross Gold (NYSE:KGC) is a penny gold stock poised for a massive upside if gold prices start gaining again. Kinross’s top and bottom-line results improved substantially with the strength in gold prices during the first few months of 2022. In the following months, the firm was able to offset the drop in gold prices with higher production.
It wrapped up its most recent quarter with a 75% bump in gold production to 595,683 equivalent gold ounces (Au eq. oz.). Moreover, the firm expects production to be at 2.1 million Au eq. oz. in 2023, 140,000 Au eq. oz. higher compared to last year. Also, it expects a 5% increase in all-sustaining costs to $1,271/oz. Nevertheless, with a dividend yield of 3.1% and KGC stock trading at multi-year lows, you have a long-term winner poised for big gains ahead.
Barrick Gold (GOLD)
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Barrick Gold (NYSE:GOLD) represents the crème de la crème in gold mining. The Canadian company operates 13 gold and copper mines across Nevada to sub-Saharan Africa under the dynamic leadership of its CEO, Mark Bristow.
The company has been one of the most profitable businesses in the sector, generating almost 50% EBITDA margins over the past five years. Moreover, despite a tough 2022, its profitability metrics were mostly in-line with its historical averages. Its fourth-quarter results showed a 13% sequential increase in gold production at a slightly higher realized gold price of $1,728/oz. All-in-sustaining costs dropped to $1,242/oz from $1,269/oz in the third quarter. For fiscal 2023, it expects to produce 4.2 million to 4.6 million oz of gold, halting a three-year decline.
Another massive opportunity for the company comes from its copper mining division, which contributes 18% to total revenues. That number could grow substantially over the next several years due to multiple long-term projects in development.
Agnico Eagle Mines (AEM)
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Agnico Eagle Mines (NYSE:AEM) was arguably the best gold producer last year despite a challenging cost and workforce environment. It marched forward with superior cost control, with record margins exceeding its 5-year averages. Moreover, it progressed its expansion projects to grow mineral resources and aimed to consolidate its position in the most lucrative mining jurisdictions.
The miner’s aggressive merger and acquisition activity, along with effective execution, led to a rapid increase in gold mineral reserves. Year-end 2022 gold mineral reserves rose 9% to 48.7 million Au eq. oz. on the back of record annualized production. Its payable gold production was at 3.280,731 Au eq. oz., a whopping 62% increase from last year. A hefty chunk of the increase was attributable to the integration of Kirkland Lake Gold, another in the long list of companies AEM has acquired over the years.
Another element of its bull case is its solid dividend profile, where payouts have grown by seven years with a yield of 3.3%. Its 5-year growth rates stand at an impressive 30.7%.
Gold Fields (GFI)
Gold Fields (NYSE:GFI) is one of the top gold mining firms in the resource-rich South African region. The firm operates mines in South Africa, Australia, Peru, and Ghana per its profile. GFI stock shed 30% of its value last year, with structural headwinds weighing down the stock.
Perhaps the biggest obstacle hindering Gold Fields was South Africa’s energy crisis last year due to Eskom’s collapse. However, despite the concerns over load curtailment, the firm Wits Basin mine stood strong, delivering spectacular results last year, as production levels and free cash flows shot up 12% and 33%, respectively.
Furthermore, production from its Australia segment surged by 4% from the prior-year period despite the weather delays. Moreover, after multiple delays, its open-cast gold-silver project in Chile should start production this year. The asset could potentially host top-tier oxidized minerals that could be effectively mined at low costs. Therefore, there is a lot to look forward to with GFI stock.
Franco-Nevada (NYSE:FNV) is a precious metals firm specializing in gold-focused royalties and streaming. Instead of mining assets, it funds mining firms for a percentage of sales or mined precious metals. FNV stock presents itself as a relatively safe bet in a volatile trading environment. This notion is shown by its high-quality profitability metrics, which show gross and EBITDA margins of 87% and 84% on a trailing twelve-month basis.
As per its latest report, FNV boasted $2.2 billion in available capital, zero debt, and $1 billion in operational cash flows. Moreover, its levered free cash flows are over 50%, mind-boggling considering the volatility in the business environment. With its disciplined capital management and low-risk business model, FNV stock should stay strong for the foreseeable future.
Compania de Minas Buenaventura (BVN)
Compania de Minas Buenaventura (NYSE:BVN) operates a high-quality precious metals business in Peru.
Peru’s mining sector has always been crucial to its economy. It’s the second-largest producer of copper and a major producer of silver, zinc, and other minerals. Moreover, it has a solid ecosystem for mining, including rich mineral resources, favorable government policies, a skilled workforce, and a strong small-scale mining environment. Therefore, it will always remain relevant in mining, boosting BVN stock’s attractiveness.
It was a familiar tone to BVN’s quarterlies compared to other gold miners discussed in the article. Its fourth-quarter results were relatively heartening, beating estimates on both lines while effectively narrowing down the losses. Its cash position reached an impressive $253.9 million at the conclusion of December, while net debt decreased by $484.6 million. The stock trades under $8, making it worth betting on for the long haul.
On the date of publication, Muslim Farooque 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.
Muslim Farooque is a keen investor and an optimist at heart. A life-long gamer and tech enthusiast, he has a particular affinity for analyzing technology stocks. Muslim holds a bachelor’s of science degree in applied accounting from Oxford Brookes University.