Now, the issue with physical gold bullion is that while they’re certainly more convenient than many other asset classes, they can present significant challenges. Storage is one. Gold is a dense material. Also, protecting one’s holdings can be problematic, especially in the current environment. Instead, investors may choose the ultimate convenience of equity ownership, which is where gold stocks come into play.
Finally, precious metals offer some shelter from the current market malaise. With the Federal Reserve likely extra incentivized to lower the benchmark interest rate amid the recent selloff, it’s time to turn to traditional inflation hedges. With that, below are gold stocks to add to your portfolio.
Newmont (NEM)
Billed as the world’s largest gold mining corporation, Newmont (NYSE:NEM) is generally a solid idea for gold stocks. This is reflected in part in the company’s valuation. Right now, NEM stock trades hands at 3.32X trailing-year sales. In contrast, the gold mining sector’s average multiple sits at 2.71X.
Despite the higher premium, investors will want to keep close tabs on Newmont. Primarily, this has to do with analysts’ forward projection. In fiscal 2024, covering experts believe that earnings per share may rise to $2.98, an increase of 85.09% from last year. On the top line, sales may hit $18.03 billion, up 52.6% from 2023’s haul of $11.81 billion.
Assuming these figures, NEM stock currently trades at nearly 16X forward earnings. That’s much lower than its trailing-year multiple of 44.33X. As for the top line, Newmont is priced at 3.03X projected revenue.
In fiscal 2025, analysts are looking at sales of $20.18 billion, with a high-side estimate of $23.24 billion. Therefore, the projected valuation could come down from here, making NEM an intriguing idea for gold stocks.
Agnico Eagle Mines (AEM)
Another top-tier producer, Agnico Eagle Mines (NYSE:AEM) is a Canadian-based gold producer with operations in Finland, Australia, Mexico and its home market. Right now, shares trade hands at 4.99X trailing-year revenue. That’s a pricey multiple, even compared to other “hot” gold stocks. However, it must be said that AEM itself has been on a strong run, gaining 39% year-to-date.
Still, forward-looking investors may want to exercise patience with Agnico. Analysts believe that by year’s end, EPS could hit $3.49. If so, that would imply a growth rate of 56.5% from last year’s print of $2.23. Also, in the following year, earnings could hit $3.65 per share, with a high-side view of $5.28. Data from Yahoo Finance reveals that AEM trades for 19.8X forward earnings.
On the top line, analysts are looking at $7.9 billion, up 19.2% from last year’s haul of $6.63 billion. That would bring the projected multiple down to 4.75X. In fiscal 2025, the top line could expand again to $8.34 billion, with a high-side estimate of $10.2 billion. Therefore, AEM could look more attractive as one of the viable gold stocks.
Kinross Gold (KGC)
Another gold production firm, Kinross Gold (NYSE:KGC) is a Canada-based enterprise with six active gold mines. It’s one of the top gold stocks in the world. However, it also features a single-digit price tag (for now), making it attractive for speculators. At the moment, KGC stock trades at a trailing-year earnings multiple of 21X and a sales multiple of 2.3X.
That already makes Kinross an attractive idea for gold stocks thanks to its modest valuation. However, circumstances could become even more favorable for prospective buyers. By the end of the current fiscal year, EPS could hit 58 cents. If so, that would be a 31.82% lift from last year’s print of 44 cents. Fiscal 2025 could see EPS soar to 69 cents, with a high-side view of $1.20.
On the top line, sales may rise to $4.76 billion, up 12.3% from last year’s tally of $4.24 billion. Assuming a shares outstanding count of 1.23 billion, the projected sales multiple could dip to 2.22X. The top estimate for next year stands at $5.63 billion, making Kinross even more attractive.
Franco-Nevada (FNV)
A gold-focused royalty and streaming company, Franco-Nevada (NYSE:FNV) doesn’t directly engage in mining operations. Instead, it provides upfront capital in exchange for the revenue (royalty) or production (streaming) of the counterparty miner. In this way, Franco-Nevada offers a more predictable business. Right now, shares trade at 32.88X earnings and 19.39X sales.
To be fair, FNV stock may be a challenging idea at the moment. Since the start of the year, FNV stock gained only 8% of equity value. Analysts believe that by year’s end, EPS could slip to $3.37. That would be down 7.42% from last year’s print of $3.64. Circumstances won’t improve until fiscal 2025, when EPS may hit $3.92.
On the top line, revenue may land at $1.12 billion. Again, that’s a decline from last year to the tune of 8%. Things should start improving in fiscal 2025 onward when sales are projected to hit $1.23 billion. The high-side estimate calls for $1.28 billion.
Assuming a shares outstanding count of 192.31 million, FNV is trading at 18.1X high-side 2025 sales. That might seem like a lot but the market previously accepted multiples of well over 20X. So, it’s still one of the gold stocks to watch.
Osisko Gold Royalties (OR)
Another Canada-based enterprise, Osisko Gold Royalties (NYSE:OR) holds royalties in gold, silver and diamond mines, making it one of the more intriguing gold stocks to consider. OR is a relatively strong performer, generating a return of over 17% YTD. Right now, shares trade hands at 34.36X forward earnings and 16.94X trailing-year sales.
By the end of this year, analysts are looking for EPS to hit 48 cents. If so, that would be a 23% lift from last year’s print of 39 cents. Next year could be even more attractive for speculators, with EPS projected to reach 58 cents. The high-side estimate stands at 69 cents.
On the top line, covering experts are tracking for sales to land at $192.22 million. That would imply a 6.3% lift from last year’s haul of $180.78 million. The next year’s target is $229.55 million, with a high-side view of $262.93 million.
Assuming a shares outstanding count of nearly 186 million shares, OR stock is currently trading at 13.44X consensus 2025 sales. That still seems high at first glance. However, the market previously accepted a multiple of nearly 18X in the first quarter of 2023.
Eldorado Gold (EGO)
One of the slightly more speculative ideas among gold stocks, Eldorado Gold (NYSE:EGO) is a Canadian firm that owns and operates gold mines in Turkey, Greece and its home market. Since the beginning of the year, EGO stock gained about 26% of equity value. That’s a decent performance. Even so, it carries relatively modest premiums of 18.31X earnings and 2.98X sales.
Circumstances could look even more enticing should experts see their forecast turn true. By year’s end, EPS could potentially rise to $1.33. If so, that would be a 133.33% lift from last year’s print of 57 cents. In the following year, EPS could improve again to $1.46. The high-side estimate calls for $1.86.
On the top line, analysts are seeking sales of $1.29 billion, up 27.8% from last year’s haul of $1.01 billion. In fiscal 2025, revenue could fly again to $1.48 billion. The high-side view is aiming for $1.54 billion. Assuming a shares outstanding count of 204.76 million, EGO is trading at 2.52X consensus 2024 sales.
With revenue projected to improve from here on out, EGO is worth considering for gold stocks to buy.
TRX Gold (TRX)
Easily one of the most speculative ideas among gold stocks, TRX Gold (NYSEAMERICAN:TRX) should not be treated as a standard investment vehicle. It’s pure speculation. For one thing, the market capitalization sits at $109 million. Second, the price of TRX stock sits at a low of 39 cents. Since the start of the year, Tanzanian has only gained less than 4%. That’s not a great start.
However, because of the blistering upside potential of penny stocks, TRX should be on your watchlist. Right now, shares trade hands at 6.71X forward earnings and 3.16X trailing-year sales. By year’s end, EPS could hit 2 cents, a doubling from last year. And in fiscal 2025, analysts believe that earnings could soar to 6 cents per share. The high-side view calls for 8 cents.
On the top line, experts are seeking revenue of $44.81 million, up 16.9% from last year. And in fiscal 2025, sales may again rise to $68.72 million. The high-side estimate here calls for $82.5 million.
Assuming a shares outstanding count of 279.57 million, TRX stock is trading at 2.44X consensus 2024 sales. That’s not bad for a speculative wager.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
On the date of publication, the responsible editor did not have (either directly or indirectly) any positions in the securities mentioned in this article.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. Tweet him at @EnomotoMedia.