As we have mentioned before, it’s very hard for a market that has been on a long roll like the current one to have a major sell-off and not retest the lows. V-shaped recoveries usually only happen when the market has been in a prolonged bear stretch and a final selling climax occurs, like in March of 2009. With many investors starting to worry about how to protect their portfolios, it makes sense to look at precious metals.
While going to cash is an alternative for nervous investors, it’s often very expensive from a commission standpoint. In addition, it often means posting gains that may be of a short-term variety. One good idea is to take some capital and move to gold stocks, as they tend to provide a hedge against declining markets and volatility.
We screened the Merrill Lynch precious metals research universe and found five gold stocks that make good sense for investors to look at now. All are rated Buy.
Agnico Eagle Mines
This is one of Wall Street’s most preferred U.S. gold producers. 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 posted solid four-quarter results and the analysts said this:
Agnico Eagle reported adjusted earnings per share of $0.21, in line with the Merrill Lynch estimates but a beat versus consensus. 2017 gold output beat forecast (again) For 2018 and 2019, the company has raised its prior gold output guidance to 1.53 million and 1.7 million ounces, though at higher costs. Agnico replaced reserves mined in 2017, thanks to converting Amaruq to reserves; and remains on track for 2 million ounces of output by 2020.
Shareholders receive a 1.15% dividend. The Merrill Lynch price target for the stock is $55, and the Wall Street consensus target is $54.84. Shares closed Friday at $38.29.
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.
Some 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.
Shareholders receive a 0.64% dividend. Merrill Lynch has a $19 price target, and the consensus target is $17.25. Shares closed Friday at $12.51.