Although, along with oil, gold has been crushed as the spot price continues to fall, that has more to do with dollar strength than any actual failure of the precious metal to hold value. Still, it doesn’t make it any easier for investors that have been hammered on both sectors. The precious metal team at RBC dissected the top companies in a new research report, looking for stocks that not only can survive, but that may be incredible buys for long-term investors at these levels.
The analysts stressed in the report that investors should consider royalty-stream companies and certain gold producers with lower debt structure and less leverage. They believe the current gold price pullback presents an opportunity to buy gold equities with strong balance sheets that have very attractive risk-reward profiles.
Eldorado Gold Corp. (NYSE: EGO) is rated Outperform at RBC. The company engages in the exploration, development, mining and production of gold properties in Turkey, China, Greece, Brazil and Romania. Eldorado also explores for iron, silver, lead, zinc and copper ores. Its principal properties include Kisladag and Efemcukuru gold mines located in Turkey; Jinfeng open pit and underground gold mine situated in southern China; and the Olympias gold, silver, lead and zinc development project and the Skouries gold-copper development project located in northern Greece.
Eldorado investors are paid a small 0.3% dividend. The RBC price target for the stock is $9, and the Thomson/First Call consensus target is at $8.46. Eldorado closed Tuesday at $5.11 a share.
Goldcorp Inc. (NYSE: GG) is also rated Outperform at RBC on the potential for solid upside. The company operates as a gold producer involved in the exploration, development and acquisition of metal properties in Canada, the United States, Mexico and Central and South America. Over the past years, Goldcorp has been altering its mine plans, cutting spending and disposing assets in order to reduce costs and focus on the most profitable production, which the CEO recently warned may be lower than current 2014 estimates. Overall, the moves place the company on solid financial ground going forward.
Goldcorp investors are paid a 3.2% dividend. RBC has a $34 price target, and the consensus target is $29.25. Goldcorp ended Tuesday at $18.41.
Randgold Resources Ltd. (NASDAQ: GOLD) is a top mid-cap stock to buy, and it has recorded solid production so far this year from its flagship Loulo-Gounkoto complex in Mali. This increased production has set Randgold up to hopefully achieve its guidance for the year. At the same time, the developing Kibali mine in the Democratic Republic of Congo remains on track to reach its forecast target despite commissioning disruptions. The company has substantial proven and probable reserves totaling 15 million ounces.
Investors in Randgold are paid a 0.6% dividend. We could not find a current rating or price target on the stock from RBC. The consensus target is $88.26. Shares closed trading Tuesday at $59.75.
Silver Wheaton Corp. (NYSE: SLW) is a royalty and streaming stock that the RBC analysts feel very positive about, and they have a rating of Outperform on it. The company has 20 long-term purchase agreements associated with silver and gold relating to 23 mining assets. Its principal portfolio includes silver and precious metal streams on the Barrick’s Pascua-Lama project, Hudbay’s Constancia project and Vale’s Salobo and Sudbury mines.
Silver Wheaton shareholders are paid a 1.4% dividend. RBC has a $31 price target, and the consensus target is posted at $28.38. The stock closed Tuesday at $17.22.
Investors looking to add a portfolio allocation of gold and precious metal stocks should consider scaling in some capital now. Sentiment is horrible, and that is always the time to take a contrarian view. At current price levels, the interest in Asia usually picks up for retail buyers. In addition, the world geopolitical situation always remains dicey, and believe it or not, there may be inflation down the road.