Top 5 Gold Stock Picks for Strategic Inflation Hedges: From GOLD to FNV
The price of gold rose above US$1,900 on Wednesday as Ukraine declared an emergency over the heightened threat of Russian invasion. Gold stocks are considered a better inflation hedge than any other asset – no wonder these stocks are rising.
On the other hand, equities are down, under the combined effect of inflation and geopolitical tensions. The benchmark S&P 500 index has fallen 3.9% over the past six months.
Bitcoin (BTC), the world’s largest cryptocurrency by market share and which influences the biggest crypto market, has fallen 43% from its peak in November last year, reflecting the volatile nature of the market.
In this context, can yellow metal stocks be a better hedge against volatility?
Here we explore the top five picks:
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Barrick Gold Corporation (NYSE: GOLD)
Closing price on February 22, 2022: US$22.76
One-year return: 12.9%
The company has a market capitalization of US$41.12 billion. Toronto-based Barrick Gold is one of the largest gold producers in the world. Its mines are in the Americas, Africa and Australia.
GOLD stock traded between US$25.37 and US$17.27 in one year. The company’s annualized dividend is $0.40 and its dividend yield is 1.56%.
In the fourth quarter and fiscal year 2021, its production was in line with its forecast. He saw strong free cash flow from operations. Net cash was US$130 million at the end of the year.
Revenue was $11.99 billion for fiscal 2021, compared to $12.6 billion the previous year. Net income was US$3.29 billion or US$1.14 EPS diluted compared to US$3.61 billion or US$1.31 EPS diluted for fiscal 2020.
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Franco-Nevada Corporation (NYSE: FNV)
Closing price on February 22, 2022: US$144.74
One-year return: 29%
Franco-Nevada Corp is a royalty and investment company based in Ontario, Canada. It does not operate mines but derives revenue from royalties.
The company has a market capitalization of US$28.07 billion, with a dividend yield of 0.81% and an annualized dividend of US$1.28. The P/E ratio is 40.66.
The price range for FNV shares has been between US$163.79 and US$105.62 for the past 52 weeks.
The company will release its fourth quarter and full year 2021 results on March 9, 2022. For the third quarter, revenue increased 13% year-over-year to US$316.3 million, and profit net increased 8% year-on-year to US$166 million or US$0.87. per diluted share. Its operating cash flow for the September quarter was US$206.9 million and its quarterly dividend was US$0.30 per share.
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Newmont Corporation (NYSE:NEM)
Closing price on February 22, 2022: US$67.17
One-year return: 18.17%
Newmont, based in Denver, Colorado, is one of the largest gold producers in the world. It was named to the Fortune 2022 list of the world’s most admired companies.
Its current market cap is US$54.58 billion. NEM stock has traded between US$75.31 and US$52.60 over the past 52 weeks. It has a P/E ratio of 27.05 and a dividend yield of 3.25%, with an annualized dividend of $2.20.
For the September 2021 quarter, its revenue was US$2.9 billion and net loss was US$243 million or US$0.60 per diluted share. For the same prior year period, revenue was US$3.17 billion and net income was US$856 million, or US$0.86 per diluted share.
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AngloGold Ashanti Limited (NYSE: AU)
Closing price on February 22, 2022: US$21.98
One-year return: 4.87%
Its current market capitalization is US$9.53 billion. The dividend yield is 0.55% and the annualized dividend is $0.122. The stock traded between US$26.77 and US$14.57 in one year.
The Johannesburg-based company explores for gold. It also produces silver and sulfuric acid. It derives most of its income from Africa.
For fiscal 2021, its revenue was US$2.06 billion and its net profit was US$260 million. Revenue and net profit were US$2.46 billion and US$532 million, respectively, in fiscal 2020.
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New Found Gold Corp (AMEX: NFGC)
Closing price on February 22, 2022: US$6.06
Return over one year: 120%
New Found Gold Corp is a mineral exploration company based in British Columbia, Canada. He is engaged in the acquisition, exploration and evaluation of mineral properties in Canada.
For the September 2021 quarter, its operating loss was US$12.27 million, compared to an operating loss of US$8.57 million for the same period in 2020. The net loss was 35, US$29 million compared to a net loss of US$11.11 million in the September quarter of 2020 last year.
The company launched its IPO in 2020 and has a current market capitalization of US$998.19 million.
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Gold stocks are seen as safe havens in a volatile market scenario. However, investors should carefully evaluate companies and the broader market before investing in stocks.