Commodities & Metals

Gold Races Toward All-Time Highs: 5 Top Stocks to Buy Now

Franco-Nevada

This off-the-radar play offers numerous ways for investors to make money. Franco-Nevada Inc. (NYSE: FNV) is a resource sector royalty and investment company that was formed to acquire an established portfolio of mining, oil and natural gas royalties and certain equity interests. The royalty assets were spun out of Newmont Mining.

The royalty portfolio represents over two decades of acquisitions by Newmont and the old Franco-Nevada, which Newmont acquired in 2002. Franco-Nevada intends to grow through the advancement of existing properties and through acquisitions and investments.

The company posted solid fiscal third-quarter results, and Merrill Lynch said this at the time:

Franco-Nevada reported third quarter of $0.54/sh, above us and Consensus at $0.44 and $0.45, due in part to a lower than expected tax rate. The company reported record revenue of $235.7 million in the third quarter and above us at $223 million. This was due to higher energy and other metals. Management guided to the upper ends of its prior GEO and energy guidance for 2019.

Investors receive a 0.88% dividend. The $108 Merrill Lynch price target compares with the seemingly absurd $81.27 consensus target, given the most recent close at $113.18.

Newmont

This is another one of the largest mining companies, and it is a solid buy for more conservative accounts. Newmont Corp. (NYSE: NEM) is a leading gold and copper producer. It employs approximately 29,000 employees and contractors, with the majority working at managed operations in the United States, Australia, Ghana, Peru, Indonesia and Suriname. Newmont is the only gold producer listed in the S&P 500 index.

In recent years, the company announced that “first gold” has been poured at its new mine, called the Merian gold mine, in Suriname in South America. It reported Merian contains gold reserves of 5.1 million ounces and that annual production is expected to average between 400,000 and 500,000 ounces of gold at competitive costs during the first five full years of production.

The analysts noted this about recent very positive news:

In keeping with its capital return objectives, Newmont announced a 79% hike in its quarterly dividend to $0.25, effective the second quarter of 2020. The company has repurchased 12.4 million shares for $506 million, halfway to achieving its $1 billion share repurchase program.

Shareholders receive a 1.25% dividend. Merrill Lynch has set a $52 price objective. The consensus target is $48.62, and Newmont stock closed at $44.97 on Thursday.

Wheaton Precious Metals

This precious metals royalty stock makes good sense for more conservative accounts looking to have exposure to the sector. Wheaton Precious Metals Corp. (NYSE: WPM) is a Canadian precious metals streaming company with approximately 60% of its revenues from the sale of silver and 40% from gold.

Under the terms of long-term contracts, the company purchases silver and gold from a variety of mines, including Goldcorp’s Penasquito mine in Mexico, Vale’s Salobo mine in Brazil, the Lundin Mining Zinkgruvan mine in Sweden, and Glencore’s Antamina and Yauliyacu mines in Peru, then sells the silver and gold into the open market.

Shareholders receive a 1.24% dividend. The Merrill Lynch price target is $38. The consensus target is $35.70, and shares closed most recently at $28.99.

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

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