Gold has gained nearly 1.5% for the week so far, after posting losses in the previous two weeks. Overall, there has been buying pressure and spot gold hit a high of $1,758.45 an ounce yesterday. Weakness in the U.S. dollar and treasury yields, coupled with disappointing jobless claims data has increased gold’s appeal to investors.
According to Jeffrey Christian, managing partner of CPM Group, “There is a real race between the variants and the vaccinations, and right now the variants seem to have the upper hand on a global basis." Moreover, the Federal Reserve Chair Jerome Powell warned that an uptick in COVID-19 cases could slow the recovery. These developments bode well for the precious metal.
The best strategy to diversify your portfolio in such scenarios is to invest in fundamentally sound gold stocks. I believe Alamos Gold Inc. (AGI), AngloGold Ashanti Limited (AU), and Franco-Nevada Corporation (FNV) are well-positioned to gain if the precious metal is able to hold its prices at the current level.
Alamos Gold Inc. (AGI)
AGI is a Canadian intermediate gold producer with diversified production from operating mines in North America, Canada, and Mexico. The company also mines silver and precious metals. AGI’s flagship project is the Young-Davidson mine, which includes contiguous mineral leases.
AGI’s production for the fourth quarter increased to 120,400 ounces of gold, indicating the highest quarterly total in 2020, boosted by performances at Young-Davidson and Island Gold. Young-Davidson manufactured 48,000 ounces of gold and generated a record mine-site free cash flow of $30.8 million. AGI sold 121,831 ounces of gold at an average realized price of $1,860 per ounce for record revenues of $226.6 million during the quarter.
The consensus revenue estimate for the quarter that ended March 31, 2021 is $233.2 million, signaling a 31.8% year-over-year increase. EPS for the quarter is expected to grow 75% to $0.14.
AGI ended yesterday’s trading session at $8.29, climbing 42% over the past year. During the past six months, the stock has declined 5.8%.
AGI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall grade of B, which equates to Buy rating in our POWR Ratings system. AGI has a Growth and Momentum Grade of B. In the Miners-Gold industry, it is ranked #10 out of 44 stocks.
To see additional grades for Stability, Value, Sentiment, and Quality for AGI, click here.
AngloGold Ashanti Limited (AU)
AU is primarily a gold miner, but it also produces silver, uranium, and sulphuric acid; and dóre bars. The company manages ten operations and three projects across eight countries across South Africa, Continental Africa, the Americas, and Australia.
AU’s production for the second half of 2020, returned to 95% of 2019 rates, led by strong performances in copper at Los Bronces in Chile and in iron ore at Minas-Rio in Brazil. There was planned maintenance at both the Collahuasi copper and Kumba iron ore operations and the suspension of operations at the Grosvenor metallurgical coal mine during the second half.
Analysts expect AU’s revenue for the year ending December 31, 2021 to be $5 billion, representing a 12.9% year-over-year rise. EPS during the period is expected to grow 22.7% to $2.92.
AU ended yesterday's trading session at $22.24, rallying 15.9% over the past year. During the past six months, the stock lost 16.2%.
Due to its bright prospects, AU has an overall grade of B, which translates to a Buy rating in our POWR Rating system. AU has a Growth, Momentum, and Value Grade of B. In the same industry, it is ranked #7.
Click here to see additional grades for AU (Stability, Quality, and Sentiment).
Franco-Nevada Corporation (FNV)
FNV operates as a gold-focused royalty and stream company operating in the United States, Latin America, Canada, Australia, Europe, and Africa, and globally. Mining and Energy are the two segments through which it operates. The company operates in precious metals, such as gold, silver, and platinum group metals; and energy comprising oil, gas, and natural gas liquids.
During the fourth quarter that ended December 31, 2020, FNV’s revenue climbed 18% year-over-year to $304.5 million. EPS for the quarter rose 56% year-over-year to $0.93. The miner generated more than $800 million in annual operating cash flow. FNV announced a new precious metals stream on the Condestable copper mine in Peru and the acquisition of a portfolio of natural gas royalties in the Haynesville play in Texas. Paul Brink, the CEO of FNV stated, “We expect strong growth in 2021 and over the next 5 years, driven by the ongoing Cobre Panama ramp-up, the two newly acquired assets, and from broad organic growth across the portfolio.”
Wall Street expects FNV’s revenue for the quarter that ended March 31, 2021 to grow 23.6% year-over-year to $297.35 million. EPS during the period is expected to grow 36.2% to $0.79.
FNV ended yesterday’s trading session at $133.43, climbing 26.8% over the year. During the past six months, FNV declined 2.7%.
FNV’s strong fundamentals are reflected in its POWR Ratings. FNV has a Quality Grade of A and a Momentum Grade of B. In the Miners-Gold industry, it is ranked #15.
To see additional grades for FNV, click here.
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AGI shares were trading at $8.32 per share on Friday morning, up $0.03 (+0.36%). Year-to-date, AGI has declined -4.91%, versus a 9.72% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education.
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