The sell-off we at 24/7 Wall St. have been anticipating for some time is probably here. Investors that got used to a market that kept going up despite minor sell-offs could be in for some pain. The buy-the-dip crowd probably cannot save it this time, especially with some across Wall Street saying the Federal Reserve may raise rates as many as six times this year. Despite the end of the day rally Monday, and the potential for an oversold bounce, the setup for stocks going forward in the near term looks negative.
There are two reasons for the recent intense selling. First, stocks are, and have remained, horribly overbought and have been trading at absurd multiples for months. Every time there was a swoon, money would flow in, especially from the growing hordes of retail traders that swelled when the pandemic was raging. Second, inflation is out of control and the Federal Reserve has to raise rates and raise them fast. Some think the Fed could raise them this week, but most think the start will be in March. The Fed meeting this week should provide additional color.
The question for investors is what to do now. One of the best ideas always has been to seek positions in commodities. The best area there for investors to look at is the top gold miners and royalty companies. We screened the BofA Securities research universe looking for the top stocks and found five that look like great ideas for worried investors now.
It is important to remember that no single analyst report should be used as a sole basis for any buying or selling decision.
Agnico Eagle Mines
This is one of Wall Street’s most preferred North American 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 stock was crushed as gold sold well off the January highs, and with an inflation surge you can bet many savvy portfolio managers are ready to add back top companies like this.
Shareholders receive a 2.75% dividend. The BofA Securities price target on Agnico Eagle Mines stock is $68.50. The consensus target is up at $94.39, and shares closed Monday’s trading at $50.29.
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