Commodities & Metals

Analysts' Top Gold Stocks to Buy for the Rest of 2014

The great equalizer in the stock market is time. Gold ripped to all-time high a few years ago, and most of Wall Street, including some big name investors like John Paulson, thought the rally would continue. The bruises inflicted on those that got in late are still very painful. A new report from the precious metals team at RBC identifies several key winners in the gold mining stocks.

RBC’s research team pointed out that given the different capital structures and varying levels of ongoing capital expenditures at the stocks in their coverage universe, they believe evaluating precious metal companies on an enterprise value/adjusted cash flow basis provides for a more level playing field and reduces the potential for mispricing.

The market is clearly edgy, as evidenced by current volatility. Adding some low-priced gold stocks to a portfolio may make good sense in case earnings turn out poor and the situation in the Middle East continues down a rocky road.

The firm tweaked some of their price targets in the gold sector, but many of those price targets remained firm. Here are the top gold mining stocks rated Overweight at RBC.

Agnico Eagle Mines Ltd. (NYSE: AEM) recently completed its joint acquisition of Canada’s Osisko Mining and its Canadian Malartic mine, which the company purchased together with Yamana Gold. The Osisko deal guided investors on both companies in recent months, so any positive news on the performance of the Malartic mine will have an immediate effect on valuation.

Most Wall Street analysts feel that consolidation at attractive prices could become much bigger in the space. Investors are paid a 0.9% dividend. The RBC price target is raised to $49 from $43. The Thomson/First Call consensus price target is $38.29. The stock closed Thursday at $39.69 a share.

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