Gold stocks have been shining in recent weeks. The war in Ukraine has sent global stock markets into turmoil, resulting in sizable declines across the board. With geopolitical tensions on the rise, precious metals, especially gold, is now making the headlines.
Investors are flocking to the relative safety of gold stocks to protect themselves against ongoing market volatility. Seasoned investors regard gold stocks as the backbone of a resilient portfolio during such periods.
The spot price for gold recently hit an 18-month high of more than $2,000 per ounce. Gold managed to go over the $2,000 per ounce price mark for the second time in its history.
Such a surge in gold prices also allows gold stocks to capitalize on this momentum and deliver higher shareholder returns. In addition, the ongoing war in Ukraine and rising inflation suggest a potentially bullish run for the foreseeable future.
Here are three gold stocks that will benefit from this uptrend and could effectively provide a safe haven for investors in current uncertain times:
Gold Stocks: Kinross Gold (KGC)
Dividend yield: 2.2%
Canada-based miner Kinross Gold currently operates seven active gold mines. Management increased its gold reserves by 2.7 million ounces in 2021.
Kinross announced Q4 2021 results on Feb. 16. Revenue decreased 26% year-over-year to $880 million due to the temporary suspension of milling operations at the Tasiast mine because of a mill fire. As a result, adjusted net earnings declined to $102 million, or 8 cents per share, compared with $335 million a year ago. Moreover, the company experienced a net cash outflow of $101 million.
The miner recently announced the acquisition of Great Bear Resources in a deal worth $1.45 billion. Great Bear’s Dixie site in Canada is regarded as the one of the most important Canadian gold deposit discoveries in modern history.
On the other hand, Kinross recently announced it is suspending operations at the Kupol mine in Russia and halting work at the Udinsk development project. Russia accounted for roughly a fifth of the production in 2021. Therefore, Kinross has not benefited from the up move in the price of gold, and the stock might still be a risky proposition for some investors.
KGC stock currently trades at $5.30, down more than 15% over the past year. Shares are trading at a relatively cheap 9.9 times forward earnings and 1.9 times trailing sales. The 12-month median price forecast for Kinross stands at $7.50.
Newmont (NEM)
Dividend yield: 3%
Denver-based Newmont is the world’s largest gold mining company. It has a diversified portfolio of top-tier assets located in multiple continents.
In February, Newmont Corporation acquired Mina Buenaventura’s (NYSE:BVN) 43.65% interest in Minera Yanacocha, South America’s largest gold mine. This transaction increased Newmont’s share in the mine to almost 95%.
Newmont announced strong Q4 2021 results on Feb. 24. Revenue increased slightly to $3.39 billion, while adjusted net income came in at $624 million, or 78 cents per diluted share. By comparison, net income in the prior year quarter was $856 million. Cash and equivalents ended the year at $8 billion.
Despite inflationary pressures and Covid-19 headwinds, the company delivered solid operating margins of around 20% in 2021. In addition, Newmont’s five-year guidance suggests a 7% growth in annual GEO production supported by declining costs.
NEM stock is up 32% over the past 12 months. Shares are trading at 19.4x forward earnings and 4.4x trailing sales. The 12-month median price forecast for Newmont is at $68.27.
Gold Stocks: Royal Gold (RGLD)
Dividend yield: 1.1%
Our final stocks is another Denver-based miner, namely Royal Gold. Management acquires precious metal streams, royalties, as well as similar production-based interests.
Regular InvestorPlace.com readers would know that “Metal streaming-and-royalty contracts are transactions under which mining companies sell future production or revenues in return for an up-front cash payment.”
Royal Gold released December 2021 quarterly results on Feb. 16. Revenue increased 6% to $169 million. Net income increased 14% to $68.2 million, or $1.04 per diluted share, up from $60 million a year ago. Cash and equivalents ended the period at $144 million.
Revenue growth was driven primarily by the NX gold mine in Brazil and Khoemacau in Botswana. Royal Gold received the first deliveries from the Khoemacau copper-silver mine in Botswana, in which the firm now owns a 90% silver stream.
RGLD stock is at a 52-week high and up more than 26% over the past year. Shares are valued at 29.4x forward earnings and 12.1xtrailing sales. The 12-month median price forecast for Royal Gold stands at $135.63.
On the date of publication, Tezcan Gecgil 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.
