Gold Shoots to 2-Year Highs Amid Turmoil: 4 Top Stocks to Buy

July 7, 2016 by 247lee

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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.

Goldcorp

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.

Kinross Gold

More aggressive investors may want to consider this smaller cap company. Kinross Gold Corp. (NYSE: KGC) engages in the acquisition, exploration, development and production of gold properties. The company’s gold production and exploration activities are carried out principally in Canada, the United States, the Russian Federation, Brazil, Chile, Ghana and Mauritania. It also produces and sells silver.

As of December 31, 2015, the company’s proven and probable mineral reserves included 34.0 million ounces of gold, 41.0 million ounces of silver and 1.4 billion pounds of copper.

Kinross posted first-quarter numbers that were essentially in line with consensus estimates. The company also announced that it is assessing the potential suspension of Maricunga mining activity by the end of October, but for now, the operating guidance remains unchanged.

Merrill Lynch has a $6.75 price target, and the consensus is much lower at $5.58. The shares closed Wednesday at $5.74.

Silver Wheaton

This is another top company that many on Wall Street favor. Silver Wheaton Corp. (NYSE: SLW) is the largest pure precious metals streaming company in the world. Based on its current agreements, forecast 2015 estimated annual attributable production is approximately 44.5 million silver equivalent ounces, including 230,000 ounces of gold. By 2019, estimated annual attributable production is anticipated to increase significantly to approximately 55 million silver equivalent ounces, including 325,000 ounces of gold.

This anticipated growth is expected to be driven by the Silver Wheaton’s portfolio of low-cost and long-life assets, including precious metal and gold streams on Vale’s Salobo mine and Hudbay’s Constancia project.

Silver Wheaton has 18 long-term purchase agreements and one early deposit long-term purchase agreement associated with silver and gold relating to 27 various mining assets. It has silver and gold interests primarily in the San Dimas, Zinkgruvan, Yauliyacu, Stratoni, Los Filos, Peñasquito, Keno Hill, Neves-Corvo, Cozamin, Minto, Barrick, Aljustrel, 777, Salobo and Sudbury mines, as well as the Rosemont, Loma de La Plata, Constancia and Toroparu projects.

Again, the company fits nicely into the Merrill Lynch metrics for quality assets and royalty streams, and the kind of balance sheet that has protected the company from the pitfalls of miners with huge capital expenditures.

Silver Wheaton shareholders are paid a 0.8%% dividend. The Merrill Lynch price target is $28. The consensus target is set at $24.50. The stock closed Wednesday at $25.61.

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Proper asset allocation should always include a single-digit percentage holding of precious metal like gold and silver. Not only do they hedge over the long term, but they can really help if the market does go in to correction or bear market mode, as they tend to trade inverse to markets.