Due to qualities like resilience against uncertainties, cultural importance, and diversified requirements, gold is seen as a hedge against inflation. Also, with expansion of gold production capabilities, investment in expanding the lifespan of current gold mines, and robust demand across the globe, the gold mining industry is experiencing significant growth.
Thus, with the industry’s bright prospects, investors could consider fundamentally solid gold mining stocks Agnico Eagle Mines Limited (AEM), Barrick Gold Corporation (GOLD), and Kinross Gold Corporation (KGC) as investments to hedge against inflation.
With the recent surge in expectations of U.S. interest-rate cuts in September, gold prices eased slightly with decline of a more than 1% Friday, though they stayed around record high hit in the previous session. Spot gold was $2,411.78 per ounce and U.S. gold futures was $2,414.70.
Gold remains a go-to asset and a hedge investment for many investors in times of economic uncertainty and market turmoil for its resilience quality. With its remarkable performance in 2024, Gold has risen by 12% in this year and has outpaced most major asset classes. The growth is attributable to continued central bank buying, Asian investment flows, and resilient consumer demand.
Over the last five decades, gold had average annual returns of 7.98%, and its annual average return of gold in 2023 was 13.1%, reflecting its robust demand owing to its historical importance, financial stability, and cultural appeal. In terms of worldwide production, gold is expected to reach 124 million ounces in 2024, which is likely to contribute to its rate of growth.
With this, IMARC Group expects the global gold market to reach 3460.71 Tons by 2032 driven by improved exploration technologies, rise in gold prices, and improvements in mining practices.
Given the industry’s encouraging trends, let’s delve into the fundamentals of the top three Miners - Gold stocks, beginning with number 3.
Stock #3: Agnico Eagle Mines Limited (AEM)
Headquartered in Toronto, Canada, AEM is engaged in the exploration, development, and production of precious metals. Its 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 acquired 33,821,842 common shares of Maple Gold Mines Ltd. on June 21, 2024 at a price of $0.085 per common share for total consideration of about $2.87 million from several sellers that acquired the common shares in connection with an offering of flow-through common shares issued by Maple.
With the recent share purchase, AEM owns 74,674,257 common shares, representing around 19.9% of the issued and outstanding common shares.
During the first quarter that ended March 31, 2024, AEM’s gold production grew 8.1% from the year-ago value to 878,652 ounces. Its adjusted net income of $377.50 million and $0.76 per share, indicates growth 39.1% and 31% from the prior year’s quarter, respectively. The company’s adjusted EBITDA came in at $929.30 million, up 25.5% year-over-year.
Furthermore, the company’s free cash flow increased 49.4% from the year-ago value to $395.60 million.
Analysts expect AEM’s revenue and EPS for the second quarter (ended June 2024) to grow 18.1% and 39.2% year-over-year to $2.03 billion and $0.90, respectively. Also, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.
Over the past six months, AEM’s stock has surged 52.5% and 39.2% over the past year to close the last trading session at $74.94.
AEM’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.
AEM has a B grade for Sentiment and Growth. It is ranked #15 out of 42 stocks in the Miners - Gold industry.
To check other POWR Ratings of AEM for Quality, Value, Momentum, and Stability, click here.
Stock #2: Barrick Gold Corporation (GOLD)
Based in Toronto, Canada, GOLD is in the exploration, mine development, production, and sale of gold and copper properties internationally. 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 July 16, GOLD reported preliminary second quarter production of 948 thousand ounces of gold and 43 thousand tonnes of copper, and preliminary second quarter sales of 956 thousand ounces of gold and 42 thousand tonnes of copper. As per guidance, GOLD’s gold and copper production is expected to increase each quarter through the year.
On May 1, GOLD’s subsidiary Barrick Gold (International Holdings) Ltd. entered into an exploration earn-in agreement with Geophysx Jamaica Ltd. The agreement gives GOLD with access to approximately 4,000 square kilometers of consolidated land positions in Jamaica.
The strategic agreement aligns well with GOLD’s operations, enhance its exploration capabilities and delivering new world-class discoveries.
During the first quarter that ended March 31, 2024, GOLD’s revenues increased 3.9% year-over-year to $2.75 billion. The company’s adjusted net earnings grew 34.8% and 35.7% from the prior year’s quarter to $333 million and $0.19 per share, respectively. Its attributable EBITDA rose 6.6% from the year-ago value to $907 million.
In addition, the company’s cash and equivalents and total assets came in at $3.94 billion and $45.84 billion as of March 31, 2024, respectively.
Analysts expect GOLD’s revenue for the second quarter (ended June 2024) to increase 10.7% year-over-year to $3.14 billion, and its EPS is expected to increase 40.9% year-over-year to $0.27 for the same quarter. Moreover, the company has topped the consensus EPS estimates in all of the trailing four quarters.
Over the past month, the stock has surged 13.2% and 19.4% over the past six months to close the last trading session at $18.54.
GOLD’s POWR Ratings reflect its robust outlook. The stock has an overall grade of B, translating to a Buy in our proprietary rating system.
GOLD has an A grade for Sentiment and a B grade for Quality. It is ranked #5 in the list of 42 stocks within the Miners - Gold industry.
To see the other ratings of GOLD for Growth, Value, Stability, and Momentum, click here.
Stock #1: Kinross Gold Corporation (KGC)
Headquartered in Toronto, Canada, KGC is engaged in the acquisition, exploration, and development of gold properties. The company operates various mines consisting the Fort Knox mine and the Manh Choh project in Alaska, the Round Mountain and the Bald Mountain mines in Nevada, the U.S., the Paracatu mine in Brazil, and the La Coipa and the Lobo-Marte project in Chile.
On May 8, KGC’s Board of Directors declared a dividend of $0.03 per common share for the first quarter of 2024. The dividend was paid on June 13, 2024, to shareholders of record as of the close of business on May 30, 2024. KGC pays an annual dividend of $0.12, which translates to a yield of 1.35% at the current share price. Its four-year average dividend yield is 2.04%.
In terms of forward non-GAAP P/E, KGC is trading at 15.52x, 2.6% lower than the industry average of 15.93x. Likewise, the stock’s forward EV/EBITDA multiple of 5.76 is 33.4% lower than the industry average of 8.66. Further, its forward Price/Cash Flow of 5.92x is 34.5% lower than the industry average of 9.04x.
During the first quarter that ended March 31, 2024, KGC’s metal sales rose 16.4% year-over-year to $1.08 billion. The company’s operating earnings grew 34.2% from the year-ago value to $193.20 million. Adjusted net earnings attributable to common shareholders came in at $124.90 million and $0.10 per share, up 42.6% and 42.8% year-over-year, respectively.
Also, the company’s adjusted free cash flow increased 204% year-over-year to $145.30 million.
Analysts expect KGC’s revenue and EPS for the third quarter (ending September 2024) to increase 10.2% and 32.4% year-over-year to $1.22 billion and $0.16, respectively. Furthermore, it has topped the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Shares of KGC have gained 63.8% over the past six months and 72% over the past year to close the last trading session at $8.91.
KGC’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.
KGC has a B grade for Quality, Sentiment and Value. It is ranked #4 out of 42 stocks in the same industry.
To check other POWR Ratings of KGC for Momentum, Growth, and Stability, click here.
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AEM shares were trading at $74.04 per share on Friday afternoon, down $0.90 (-1.20%). Year-to-date, AEM has gained 36.92%, versus a 16.04% 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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