With market anxieties rising to the forefront, investors inherently seek protection, which bodes well for gold stocks to buy. To be fair, the yellow metal historically garnered criticism because, at the end of the day, it’s just a commodity. Gold doesn’t hire workers, it doesn’t generate earnings and most importantly, it has a yield (passive income) of 0%. What good is that during these difficult times?
Well, with fears of a banking contagion spreading to other components of the global economy, investors shouldn’t be quick to dismiss gold stocks to buy. Underlining this specific mining sector is an asset that offers intrinsic value. Basically, no matter where you go, gold will command often great value. As well, gold obviously carries physical mass – it’s not going to disappear arbitrarily. Finally, mining enterprises offer a significant convenience over lugging around bullion bricks. With that in mind, below are the gold stocks to buy amid heightened market fears.
|WPM||Wheaton Precious Metals||$46.15|
Wheaton Precious Metals (WPM)
A Canadian multinational firm, Wheaton Precious Metals (NYSE:WPM) represents a precious metals streaming company. Per its public profile, Wheaton produces over 26 million ounces and sells over 29 million ounces of silver mined by other companies as a by-product of their main operations. Of course, it also commands a significant presence in the gold production market.
What investors of gold stocks to buy will appreciate about WPM centers on operational predictability. With streaming, participants understand the costs associated with streaming contracts upfront, limiting variability. Specifically, Wheaton enjoys a three-year EBITDA growth rate of 34.2%. As well, its net margin is 63.19%. Both stats, particularly the latter, rank in the top half of the underlying industry.
In terms of passive income, Wheaton isn’t the most generous with a forward yield of 1.32%. However, it does pay one with a low payout ratio of 44.53%, facilitating confidence in yield sustainability. Finally, Wall Street analysts peg WPM as a consensus strong buy. Their average price target comes in at $47.97, implying 6% upside potential.
Royal Gold (RGLD)
Another company that specializes in the streaming business model, Royal Gold (NASDAQ:RGLD) also commands a royalty business. Per its public profile, Royal Gold owns a large portfolio of producing, development, evaluation, and exploration stage streams and royalties on properties located in some of the world’s most prolific gold regions.
As with Wheaton Precious Metals, Royal Gold benefits from greater predictability compared to pure-play gold stocks to buy. With parties signing contracts with terms disclosed ahead of time, RGLD provides at least a modicum of confidence for investors. Specifically, Royal’s three-year revenue growth rate comes in at 12.5%, outpacing 63.35% of the competition. Also, its book growth rate during the same period is 8.6%, an above-average figure.
Now, Royal doesn’t provide the greatest forward yield at 1.2%. However, the company carries 21 years of consecutive annual dividend increases. Lastly, covering analysts peg RGLD as a consensus moderate buy. Their average price target is $134.67, implying upside potential of over 7%.
Based in Toronto, Ontario, Franco-Nevada (NYSE:FNV) is another Canada-based gold royalty and streaming firm. While many securities stumbled during the banking sector fallout, FNV (and other gold stocks to buy) performed remarkably well. For instance, in the trailing week, FNV gained over 5% of equity value. And while it’s down in the trailing year, FNV’s recent performance could reverse the losses.
Again, similar to the top two gold stocks to buy, Franco-Nevada benefits from predictability in its business. Better yet, it’s paying off. For example, the company’s three-year revenue growth rate is 16.2%, above 82.76% of the industry. Also, its EBITDA growth rate during the same period is 18.5%, beating out 78.1% of sector players. Plus, the company’s net margin is 53.21%, which ranks extremely high. Unfortunately, the forward yield here is only 0.95%. I suppose it’s better than nothing.
On a closing note, covering analysts peg FNV as a consensus moderate buy. Moreover, their average price target comes in at $160.58, implying 12% upside potential.
Based in Greenwood Village, Colorado, Newmont (NYSE:NEM) owns the distinction of being the world’s largest gold-mining corporation. As with the other gold stocks to buy, life has been good for Newmont while other investment categories suffered. In the trailing week, NEM gained nearly 11%, an excellent figure, especially for such a large enterprise. While it’s down sharply in the past 365 days, it could be interesting days ahead for Newmont.
Financially, the company brings a mixture of financial metrics, some good, some not so good. For the bad news, Newmont struggled throughout the new normal, leading to a negative three-year EBITDA growth rate. However, on the positive side, Newmont features an operating margin of 13.47%, outpacing 69% of the field.
Another reason to consider NEM as one of the gold stocks to buy centers on the underlying passive income. Presently, Newmont’s forward yield is 3.32%, which ranks above the materials sector’s average yield of 2.82%. In closing, Wall Street analysts peg NEM as a consensus moderate buy. Further, their average price target stands at $54.70, implying almost 14% upside potential.
Barrick Gold (GOLD)
A mining company that produces gold and copper, Barrick Gold (NYSE:GOLD) features 16 operating sites in 13 countries. Because of its commodities portfolio, Barrick offers flexibility among gold stocks to buy. Those primarily concerned about the banking sector fallout can bid up GOLD shares. On the other hand, copper production bodes well for compelling sectors such as electric vehicles.
Carrying a similar profile to Newmont, Barrick financially offers a mixed bag. Again, the company suffered during the post-coronavirus new normal, leading to a negative entry for its three-year EBITDA growth rate. On the other hand, investors of gold stocks to buy will likely appreciate Barrick’s operating margin of 27.25%. This metric outpaces 85% of the competition. Interestingly, Barrick features a decent forward yield at 2.21%. Also, its payout ratio sits at 39.44%. Turning to Wall Street, analysts peg GOLD as a consensus moderate buy. In addition, their average price target stands at $21.74, implying 20% upside potential.
Centerra Gold (CGAU)
A Canadian mining enterprise, Centerra Gold (NYSE:CGAU) owns and operates the Mount Milligan copper-gold mine in British Columbia, Canada, and the Öksüt gold mine in Turkey. Given the enthusiasm for gold stocks to buy, CGAU handsomely benefitted. In the past week, it gained nearly 3%. For the year so far, it managed to swing up almost 19%.
In fairness, in the past 365 days, CGAU dropped 34%, making it a high-risk proposition. Still, contrarian investors may want to consider giving shares a twirl with speculation-earmarked funds. Most notably, Centerra enjoys a solid balance sheet. In particular, its debt-to-EBITDA is 0.25 times, well below the sector median of 1.53 times.
Further, Centerra appears undervalued. Presently, the market prices CGAU at a trailing book multiple of 0.77. As a discount to book value, the company ranks better than 80% of the competition. Looking to the Street, covering analysts peg Centerra shares as a consensus moderate buy. Moreover, their average price target stands at $7.75, implying nearly 22% upside potential.
Sibanye Stillwater (SBSW)
Based in resource-rich South Africa, Sibanye Stillwater (NYSE:SBSW) arguably commands the greatest upside potential among gold stocks to buy here. However, it’s also one of the riskiest enterprises that you can engage in, meaning investors should take necessary precautions. With Sibanye, it’s not just about the volatility of the underlying assets that pose problems. Increasingly, issues such as labor strikes impede progress.
As evidence, look no further than SBSW’s trailing one-year loss of 53% of equity value. Compounding matters is that on a year-to-date basis, Sibanye dropped almost 24%. To pour salt on open wounds, investment resource Gurufocus warns its readers that the gold miner could be a possible value trap. On the other end, the company’s three-year revenue growth rate is 20%, above 79.19% of the industry. Also, its net margin comes in at 13.3%, beating out 76% of its peers. Finally, Wall Street analysts peg SBSW as a consensus moderate buy. As well, their average price target stands at $12.28, implying over 48% upside potential.
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.