While the underlying concept of portfolio gold stocks might appear anachronistic as all heck, these days, shifting your attention to precious metals makes increasingly more sense. As an all-encompassing summary, we really don’t know what lies ahead for the economy. Therefore, exposure to a traditional safe-haven asset might appeal to certain market participants.
For one thing, credit rating agency Fitch downgraded the U.S. long-term foreign currency rating to AA+, a negative reassessment that hasn’t occurred in more than a decade. In fairness, experts view such actions as largely symbolic. However, the concern this time around is that the scale of U.S. borrowing needs shocked Wall Street. Therefore, the fear trade may realistically undergird gold stocks.
Second, the metals and mining sector – while not a perfect correlation to the underlying spot market – offers a far more convenient exposure to the precious metal. With Midas Touch gold stocks, you don’t need to worry about hauling heavy and dense bullion bricks. Nor must you pay much attention to storage and security. If you’re ready to rake in some profits without the hassles, check out these gold stocks to buy.
Agnico Eagle Mines (AEM)
A Canadian-based gold producer, Agnico Eagle Mines (NYSE:AEM) features operations in Finland, Australia, Mexico, and its home nation. It also runs exploration and development activities – which are more speculative than established operations – in the U.S., along with other regions. Per its public profile, Agnico carries full exposure to rising gold prices thanks to its policy of no-forward gold sales.
Since the beginning of this year, AEM dipped almost 10% of equity value. Arguably, though, this red ink provides an opportunity for contrarians to acquire portfolio gold stocks at a discount. Notably, AEM trades at 9.41x trailing-year earnings. In contrast, the sector median stands at a loftier 13.43X. What’s more, AEM features a price/earnings-to-growth ratio of 0.51x, lower than the sector median of 0.89x.
Further, what could entice speculators of Midas Touch gold stocks is the underlying profitability picture. Agnico runs a net margin of 40.49%, above 92.71% of its peers. Also, its return on equity (ROE) impresses at 14%.
Gold Fields (GFI)
One of the world’s largest offerings of portfolio gold stocks, Gold Fields (NYSE:GFI) presents an intriguing idea for those looking to both protect their wealth and accrue solid capital gains. Based in Johannesburg, South Africa, Gold Fields conducts business in its resource-rich homeland. In addition, it owns and operates mines in Ghana, Australia, and Peru.
Since the beginning of this year, GFI gained over 22% of its equity value. In the trailing year, shares swung up 43%. To be fair, such a strong performance might dissuade contrarians seeking Midas touch gold stocks. For example, GFI trades at a forward earnings ratio of 18.87x, which ranks worse than 67.53% of the competition.
That’s not necessarily ideal. However, GFI also runs a PEG ratio of 0.47x, favorably lower than 63.82% of its peers. Further, Gold Fields commands strong operational stats, including a three-year revenue growth rate (per-share basis) of 17.6% and an EBITDA growth rate during the same period of 30.2%. Therefore, it’s one of the gold stocks to put on your radar.
B2Gold (BTG)
Arguably the riskiest idea on this list of portfolio gold stocks, B2Gold (NYSEAMERICAN:BTG) is another Canadian mining outfit that owns and operates mines in Mali, Namibia and the Philippines. So far this year, BTG slipped almost 13%. Fundamentally, investors have been trimming their exposure in recent months due to inflationary costs biting into the business. Still, management has also focused on improved mine performances and acquisitive strategies.
For those that want to believe in the upside narrative, BTG somewhat stabilized over the course of the one-year period. In this frame, shares lost just under 6% of value. Moving forward, the company could rise on its robust profitability profile. For example, B2Gold prints an operating margin of 32%, outflanking 89.58% of sector rivals.
Also, BTG offers a fundamental discount. Specifically, BTG trades at a PEG ratio of 0.43x. This stat ranks lower than 69.51% of the competition. Also, the market prices BTG at 5x operating cash flow, lower than 68% of other gold miners.
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.
