Let’s just say that the last few years haven’t quite so golden for firms that dig precious metals out of the ground. After exploding higher during the Great Recession and reaching about $2,000 per ounce, gold has been on a one-way ticket downwards. The combination of lowered inflation expectations and an improving global economy basically zapped much of the precious metals appeal for many investors and speculators.
That has affected the gold miners share prices in a big way, with the Market Vectors Gold Miners ETF (GDX) falling about 61% since hitting its peak.
However, times could be changing for gold miners.
According to investment Credit Suisse (CS), many of the issues facing he gold miners could be subsiding. Cost cutting is the name of the game for many of the stocks in the gold sector, while mine closures have helped reduce supplies. Meanwhile, the current macro-economic sentiment bodes well for higher gold prices down the road.
All of which mean that the gold miners could be a big buy in the weeks ahead. Here are five of the best gold mining stocks to buy today:
Gold Mining Stocks To Buy #1 — Goldcorp (GG)
Low cost has always been Goldcorp’s (GG) mantra.
GG has historically been one of the lowest cost-per-ounce gold miners on the planet. That tradition continues in this new lower gold price environment. According to the firm’s last earnings report, it’s all-in sustaining cost — which has become the go-to metric for the gold sector — was just $852 per ounce of gold. That compares to $1,227 for the same period a year ago and GG’s $912 per ounce long-term average.
That basically means that GG is making around $450 in profits per ounce of gold it mines.
Getting to that point hasn’t been easy. Goldcorp has been aggressively selling off unprofitable mines, cutting capex budgets and adjusting various operating plans to in order to improve efficiencies. The efforts continue to bear fruit as the gold miner has managed to reverse losing money a year ago and turn back into the black.
Going forward, those efforts should continue to drive higher earnings at the gold miner as the macroeconomic picture looks rosier for gold.
Meanwhile, shares of GG stock offer a monthly 2.2% dividend for investors while they wait.
Gold Mining Stocks To Buy #2: Agnico Eagle Mines
The downturn in gold prices has been a boon to those firms in a position to buy. One such firm has been Agnico Eagle Mines Limited (AEM). Using its relatively conservative balance sheet, AEM has managed to go on the hunt and snag a few smaller, struggling rivals. In this case it was Canada’s Osisko Mining and its Canadian Malartic mine.
That deal may turn out to be a huge win for AEM for the long term.
The mine has nearly 14 years’ worth of supply left at roughly 600,000 ounces of gold per year. The buy strengthens AEM’s total proven reserves at just under 21.6 million ounces. That puts it near the top of the pack in terms of mid-tier gold miners. Furthermore, the mine is already operational — saving on costs — as well as being of higher ore grades.
And like GG, AEM has managed to improve its operating costs and turn previous losses into profits. The gold miner managed to see adjusted earnings of 28 cents per share for the second quarter. That compares to a 14-cent loss recorded a year ago. Those profits should continue as gold prices rise and production at the newly added Malartic mine is incorporated into AEM’s.
Gold Mining Stocks To Buy #3: Kinross Gold
When gold was booming, Kinross Gold (KGC) seemed to have it all. Then a series of ill-timed acquisitions and mine expansions hurt the stock. Over a period of about six years, shares of KGC stock fell from about $23 down to the sub-$4 mark where they sit today.
However, things may finally be looking up for long suffering KGC stock investors.
The firm has finally gotten serious about trimming its costs. Incoming CEO Paul Rollinson suspended KGC’s dividend, halted unprofitable mines and slashed spending at the miner. In fact, Kinross plans to cut spending by a whopping $555 million this year alone. These efforts will stop the gold miner’s cash flow issues and should shore up its finances.
Overall, that should help the firm regain its footing as gold prices rise again. However, investors can win another way with KGC stock — rising M&A.
KGC features vast reserves and significant scale of operations. Yet, its issues have caused its market cap to fall to around $4.45 billion. That makes it a prime target for larger gold miners with cash to put to work looking to add reserves on the cheap. That could help explain why the average analyst price target for KGC stock is around $5.36 per share or almost 40% higher than today’s selling price.
Gold Mining Stocks To Buy #4: Yamana Gold
One of the biggest winners for rising gold prices could be mid-tier Yamana Gold (AUY).
During the precious metals meltdown, AUY was very conservative when it came to reporting costs and reserve values. As result, it didn’t have to downgrade many of its mines last year. That will work in its favor this year as gold prices rise. And we’ve already seen that come to fruition with its latest earnings report after the last two years of disappointments.
That conservative reserve accounting, along with higher production and lower costs (around $915 an ounce) helped AUY reverse its losses and record a profit for the quarter. Adjusted earnings came in at $43.3 million or 5 cents per share — beating analyst estimates by a penny. Meanwhile, the firm has announced that it plans on selling several non-core mines in Brazil in order to take advantage of deals elsewhere — such as partnering with Agnico Eagle on its Osisko Mining purchase.
In addition to all of this, AUY has continued to reward patient investors. The firm pays a sector-high dividend of 1.7%.
Gold Mining Stocks To Buy #5: Barrick Gold
Perhaps one of the best gold stocks to buy could be one of the biggest — and most beaten-down. Major miner Barrick Gold (ABX) has suffered under the weight of ill-timed expansion plans and low gold prices. Add in a failed merger attempt with mega gold miner rival Newmont (NEM) and it’s easy to see how ABX shares have tanked over the last few years.
Yet there are signs of optimism on the horizon for ABX stock. Like the other gold players on this list, cost controls may finally be working their magic.
ABX has sold nearly $1.3 billion worth of non-core assets since 2012 and more mines could be on the chopping block. At the same time, Barrick has reduced its CAPEX spending by around $200 million this year. Overall, ABX now has an all-inclusive cost of production around $863 per ounce. Those reductions helped the firm guide to slightly less loss than in previous quarters. In fact, minus an impairment charge at a mine in Saudi Arabia, ABX actually made money this quarter.
While the lack of profits still stings, ABX’s future guidance showed positive results. Meaning, the king of the gold miners may finally be back on top in the near future.
In the meantime, ABX shares are still 68% below their five year peak and offer a 1.1% dividend for investors will to wait.
As of this writing, Aaron Levitt did not hold a position in any of the aforementioned securities.