There is one constant on Wall Street, and that is the so-called experts often yell the loudest that something is going lower when it is already at the bottom. This year alone, some of the top firms proved just that, advising clients to sell at the low on both oil and gold because both were going lower. Oil at one point was up close to 100% from the February lows, and gold is the highest it’s been in two years.
The good thing for investors looking to add some gold to their portfolio is some of the top stocks to buy are still very reasonable. We screened the Merrill Lynch research database and found four that would be solid additions to any long-term growth portfolio.
Agnico Eagle Mines
This top stock has remained a long-time Wall Street favorite. Agnico Eagle Mines Ltd. (NYSE: AEM) is a senior Canadian gold mining company that has produced precious metals since 1957. Its eight mines are located in Canada, Finland and Mexico, with exploration and development activities in each of these regions, as well as in the United States and Sweden. The company and its shareholders have full exposure to gold prices due to its long-standing policy of no forward gold sales. Agnico Eagle has declared a cash dividend every year since 1983.
The company was the most successful in reducing its all-in sustaining costs year-over-year in 2015. It came in 29% lower, at $810 per ounce. The company also lowered its cash cost guidance for the second time this year to $850 per ounce (mid-point) from $880 per ounce. The upgrades mainly have been due to higher-than-expected grades and currency tailwinds from the Canadian dollar and the Mexican peso.
The company remains one of the top picks on Wall Street as it fits the objectives of having quality mining assets with attractive margins, and it sports a very solid balance sheet.
Agnico Eagle investors are paid a 0.9%% dividend. The Merrill Lynch price objective is $59.50, and the Thomson/First Call consensus target is $49.80. The shares closed Wednesday at $56.34.
This top company with a solid balance sheet makes sense for investors to consider. Goldcorp Inc. (NYSE: GG) engages in the acquisition, exploration, development and operation of precious metal properties in Canada, the United States, Mexico and Central and South America. It primarily explores for gold, silver, copper, lead and zinc deposits.
Goldcorp’s principal mining properties include the Red Lake, Éléonore, Porcupine and Musselwhite gold mines in Canada; the Peñasquito and Los Filos mines in Mexico; the Marlin property in Guatemala; the Cerro Negro and Alumbrera mines in Argentina; and the Pueblo Viejo mine in the Dominican Republic.
Wall Street analysts feel that the company deserves a premium valuation to its peers due to its excellent balance sheet, growth profile with lower cost new mines, longer average mine life and a solid dividend yield. Over the past few 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.
Goldcorp investors are paid a 0.4% dividend. The Merrill Lynch price target is $27.50, and the consensus is at $20.32. Shares closed Wednesday at $20.10.