If you plan to diversify your portfolio in light of recent events, investing in gold stocks could be a good choice. Gold stocks not only track the movements of gold prices that tend to rise in uncertain times, but they also typically gain value in a rising stock market.
With gold prices trending higher, gold stocks could serve as a hedge to stocks you hold from other economic sectors. Gold stocks can also be traded speculatively in the current economic environment.
Keep in mind that gold stocks can vary considerably in price and investment quality, ranging from highly-rated listed stocks to pink sheet penny stocks. The best gold stocks will depend on your risk tolerance and financial objectives.
Highlighted Gold Stocks
- Newmont Corporation (NYSE: NEM)
- Barrick Gold Corp. (NYSE: GOLD)
- Yamana Gold (NYSE: AUY)
- Kirkland Lake Gold (NYSE: KL)
- Eldorado Gold (NYSE: EGO)
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Overview: Gold Stocks
Newmont Corporation (NYSE: NEM) is the world’s largest gold mining stock. The Greenwood Village, Colorado-based company was incorporated in 1921 after being founded in 1916 by William Boyce Thompson. The company employs 24,000 people worldwide and is the only gold mining company in the S&P 500 index.
Barrick Gold Corp. (NYSE: GOLD) ranks as the second-largest gold mining company in the world and is based in Toronto, Ontario, Canada. The company was founded by Peter Munk and was listed as a publicly-traded company on the Toronto Stock Exchange in 1983.
Yamana Gold Inc. (NYSE: AUY) was founded by Peter Marrone and is based in Toronto. Yamana began operations in 2003 and grew significantly with the purchase of other gold companies in 2005, 2006 and 2007.
Kirkland Lake Gold (NYSE: KL) is based in Toronto and was founded by Brian Hinchcliffe and Harry Dobson in 1994. The company began operations as Brimstone Gold Corporation, growing through key acquisitions such as Foxpoint Resources in Vancouver and Kirkland Lake in Ontario.
Eldorado Gold Corporation (NYSE: EGO) was founded in 1992 as Sino Gold Mining and has its base in Vancouver. The company’s activities span all facets of mining, including exploration, reclamation, development and production.
Best Online Brokers for Gold Stocks
You can buy gold stocks through virtually any broker with access to major stock exchanges and commission-free trading is offered at many online stock brokerages. Some of the top U.S. brokers that you might consider to trade gold stocks through include: E*TRADE, T.D. Ameritrade, Charles Schwab or Interactive Brokers.
Features to Look for in a Gold Stock
- A strong balance sheet: As with stocks in general, a strong balance sheet with consistent earnings per share growth would qualify a stock for consideration. The balance sheet will also indicate the amount of cash on hand and the amount of debt outstanding. A miner needs cash flow to find more gold and to maintain the gold it holds in reserves, while more cash typically indicates lower debt.
- Location of mining operations: Most investment-grade mining companies operate multiple mines in their base country, as well as in other countries where the company owns an interest in mines and mining operations. Mines operated abroad could be at risk for a number of reasons, including geopolitical concerns, although most mining companies work with the governing bodies of the countries where their mines are located. Ideally, mines located abroad should be in politically stable countries to mitigate geopolitical risks.
- Solid operating margins: In the gold mining business, the better the margins, the higher the cash flow. The margins for gold miners tend to improve as the gold price trends higher, thereby fueling further upside in the price of gold stocks.
Gold Stocks to Watch Out for this Year
The price of gold has reached recent highs due to current news focused on the global coronavirus shutdown strongly affecting world markets. Once the world’s economy begins to reopen, the price of gold and gold-based assets may correct initially, but they could then continue trending higher. Also, if the price of gold remains fairly stable at current levels, gold mining stocks could make a good investment over the coming year. Benzinga is currently watching these stocks.
1. Newmont Corporation (NYSE: NEM)
Newmont Corporation’s stock recently traded as low as $40.73 on March 16 but now trades considerably higher. Due to the 20% increase in gold prices in 2020’s Q1 from a year ago, Newmont declared a $0.25 dividend after reporting net income of $326 million or $0.40 per diluted share on May 5. The company also withdrew its 2020 full-year guidance figures since some production could be deferred to 2021, which would impact this year’s costs.
Barrick no longer qualifies as one of our stocks under $20 after trading up from $12.70 in March 2020 to hit $28.52 per share in April 2020. The almost $300-ounce surge in gold prices put Barrick at $26.87 per share. Barrick is the world’s second-largest gold miner and 90% of its earnings come directly from gold mining.
Barrick stock makes up the closest to a pure play in relation to the price of gold among major gold miners. Barrick announced a 17% reduction to its debt from the end of 2019’s Q4.
3. Yamana Gold Inc. (NYSE: AUY)
Now trading at $4.87 per share, Yamana Gold stock qualifies as one of the stocks under $5 that could accommodate investors looking for a good low-priced gold mining stock. Yamana reported net earnings of $45 million, or $0.05 per share on April 30 versus a net loss of $4.1 million for the same period 1 year ago. Yamana stock has also risen notably from its low of $1.78 per share seen in July of 2019. Despite the stellar results for the company’s Q1 and an increase in the stock’s dividend, Yamana revised its 2020 production guidance due to temporary mine closures as a result of the COVID-19 pandemic.
4. Kirkland Lake Gold (NYSE: KL)
Kirkland Lake Gold has been one of the fastest-growing stocks in the gold sector with considerable mining interests in Australia and Canada. On May 6, the company reported a sharp increase in 2020 Q1 earnings due in part to the company’s acquisition of Detour Gold Corp. and higher gold prices.
Kirkland’s adjusted net earnings came to $179.2 million or $0.70 per share, up 57% from the $0.54 per share seen for the same period one year ago. Due to the COVID-19 situation, many of the company’s operations have been reduced, which will impact output and costs for the rest of the year.
5. Eldorado Gold Corporation (NYSE: EGO)
Eldorado Gold Corp. stock has tripled since trading at $3.11 per share back in May 2019. Currently trading at $9.35 per share, Eldorado’s stock qualifies for our list of stocks under $10. With over 17 million ounces of gold in their market capitalization and four operating mines that produce 400,000 ounces per year, the company is poised to increase production throughout the rest of 2020.
On April 30, 2020, Eldorado reported adjusted net earnings of $12.5 million, or $0.08 per share compared to a net loss of $21.1 million or -$0.13 per share seen in 2019’s Q1. The company’s current adjusted net earnings include a $12.2 million loss on foreign exchange translation and deferred tax balances.
Biggest Gold Movers of the Day
Depending on earnings releases and other important company news, other gold mining stocks could gain significantly in the pre-market and regular trading sessions.
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Gold Stocks: Is Now the Time to Buy?
The gold mining sector has been one of the few segments of the overall economy that have gained during the COVID-19 world health crisis. The gains in gold stocks can be attributed to the surge in the price of gold, with many companies adjusting to temporary mine closings all over the world.
Buying gold stock shares with gold at current levels makes sense if the price of gold holds the $1,500 per ounce level and may present additional opportunities if the price of gold sells off.
If you are looking for stocks by price, be sure to take a look at our other pages covering stocks by price.
- Stocks under $5 (Assumes price greater than $1)
- Stocks under $10 (Assumes price greater than $5)
- Stocks Under $20 ( Assumes price greater than $10)
If you are looking buy gold stocks check out the Benzinga online broker rankings.
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