The one asset class that has befuddled investors over the past two years has been gold. The bears have said the gold trade is over and chasing
it now is a fool’s game. The bulls have maintained that, between solid Asia and India demand, and a host of geopolitical hotspots around the
world, the precious metal can more than regain at least a portion of its former mojo.
In what has to be viewed as a somewhat bullish survey released by J.P. Morgan’s precious metals team, the number of funds holding gold has
actually increased over the past year. Gold equities are back in favor with more than 71% (vs. 48% in 2013) of the J.P. Morgan survey respondents expecting equities to outperform gold in the next 12 months. In the longer term, 62% of investors believe equities will outperform gold over a 36-month time horizon, compared to 49% last year.
Here are some of the top gold stocks that are followed by the J.P. Morgan analysts.
Agnico Eagle Mines Ltd. (NYSE: AEM) is rated Neutral at J.P. Morgan. The company 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 Thomson/First Call price target is $39.63. Shares closed Tuesday at $39.42.
Barrick Gold Corp. (NYSE: ABX) is another top name rated Neutral at J.P. Morgan. Between asset sales and new equity, the company has raised nearly $4 billion in liquidity. Coupled with a lower dividend payout of $235 million and reduced capital expenditures, Barrick should generate about $1.2 billion in free-free cash flow.
Barrick also recently announced it will work with the Saudi Arabian Mining Company (Ma’aden) to develop its copper mine in the country, a partnership that the Canadian company aims to replicate with other projects, such as its mothballed Pascua Lama in the Andes. The stock pays investors a 1.1% dividend. The consensus price target is $20.29. Barrick closed Tuesday at $18.33.
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