WPM - 3 Gold Stocks to Buy as the Yellow Metal Explodes in Value
2024-06-17 08:46:44 ET
InvestorPlace - Stock Market News, Stock Advice & Trading Tips
Alternative investments have seen plenty of interest in recent years, and unsurprisingly gold remains one of the top choices for investors. Gold is one of the world’s oldest commodities and has kept retained its value over time. This commodity has held a robust valuation due to its fundamental scarcity. Moreover, it is also future-proof. Many commodities have dropped substantially due to the ability to artificially produce these commodities on the cheap. Gold is much simpler in this regard, with a small percentage of the global supply mined every year (and some lost as well).
Plus, demand for the yellow metal is only getting more robust as time passes. Many countries around the world are seeing double or even triple-digit inflation and do not have access to a decent hedge except gold. It’s no wonder that gold prices have increased 18.7% over just the past year. I think investors can confidently assume that gold prices will continue to increase in the coming years.
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As such, I think it makes sense to invest in some gold stocks right now. Many gold companies are still trading at discounted levels and could see a huge rebound once rising gold prices translate to their balance sheets. Here are three gold stocks to consider right now.
B2Gold (BTG)
B2Gold (NYSEMKT: BTG ) is a gold mining company with operations in Mali, the Philippines, and Namibia. The company reported solid Q1 2024 results, with gold production of 225,000 ounces and cash costs coming in well below annual guidance. Despite this reality, B2Gold’s stock has declined by around 60% from its 2020 peak and is down nearly 45% from pre-pandemic levels.
I believe B2Gold is poised for a recovery in the coming months. Rising gold prices, driven by inflation concerns and geopolitical uncertainties, provide a strong tailwind for the company. Additionally, B2Gold’s talks with the Malian government about the Fekola complex expansion project could potentially add 100,000 ounces of annual production.
Furthermore, the company’s successful completion of its Gramalote project in Colombia has significantly de-risked the company’s production picture. Despite a slight delay in the estimated first gold pour to Q2 2025, the construction team remains on track. Analysts also expect a recovery in B2Gold’s profitability and revenue starting in 2025 . As such, I believe B2Gold’s stock will likely bottom out soon.
Barrick Gold (GOLD)
Barrick Gold (NYSE: GOLD ) is one of the world’s largest gold mining companies. Despite a strong commodities market, GOLD stock has disappointingly lagged the strong commodities market. This is another top gold miner that’s down roughly 45% from its 2020 peak.
However, I see a compelling investment opportunity here. Barrick’s Q1 results highlight its ability to boost profitability as gold prices rise. Analysts are projecting robust top-line growth of 12.5% this year and 11.9% in 2025 .
Barrick is trading at a big discount compared to peers, many of whom have lower book values. As Barrick’s production ramps up at key assets like Pueblo Viejo and Porgera, I expect the company to close this valuation gap over the medium-term.
Wheaton Precious Metals (WPM)
Wheaton Precious Metals (NYSE: WPM ) is a leading precious metal streaming company. If you don’t know how a streaming business model works, it basically means the company purchases production from miners at predetermined discounted prices. This model has proven highly effective, with WPM shares surging 18.6% over the past year.
In Q1, Wheaton Precious Metals delivered impressive results, beating earnings estimates by 18%. Revenue also came in 4.7% higher than expectations, at $296.8 million . The company’s Salobo, Constancia, and Penasquito mines were the standout performers. Operating cash flows hit $219 million , while net earnings topped $164 million.
However, while I’m bullish on Wheaton Precious Metals’ streaming prowess and gold price tailwinds, I’d be cautious about the stock’s current valuation. At 39-times forward earnings, significant optimism seems to be priced in. Continued execution is critical to justify this premium. However, for investors who are comfortable with the valuation, WPM stock seems like a high-quality option to ride the gold bull market higher.
On the date of publication, Omor Ibne Ehsan did not hold (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 .
Omor Ibne Ehsan is a writer at InvestorPlace. He is a self-taught investor with a focus on growth and cyclical stocks that have strong fundamentals, value, and long-term potential. He also has an interest in high-risk, high-reward investments such as cryptocurrencies and penny stocks. You can follow him on LinkedIn .
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