In this article we will list the 10 best gold mining stocks to buy according to Wall Street analysts.
Gold has reached an all-time high, capping a 20-month rally with a 50% increase. Although the selling pressure from the retail investor would have an adverse affect on gold prices, however, this surge is driven by central banks buying record volumes of bullion mainly due to the desire to reduce dependence on US dollar, conflicts in the Middle East, and strong demand from Chinese consumers amid disappointing local equities, property, and currency markets. Furthermore, Chinese political leaders noticed that financial assets of the Russian government including bonds and reserves got confiscated by Western governments after Russia invaded Ukraine. Christopher Mancini, who co-manages Gabelli Gold Fund says “The Chinese central bank saw that happened and said ‘We don’t want that to happen to us.’ It would make sense for them to want to significantly retire their [U.S.] dollar reserves. With gold, they don’t have to worry about being repaid. We know they have been buying a consistent amount of gold every day.”
Bernard Dahdah from Natixis suggests central banks might continue buying gold due to tensions between the US and China, potentially making prices above $2,300 the new norm. The move to gold also reflects a broader trend of nations reducing their reliance on the U.S. dollar, prompted by the dollar’s use as a geopolitical tool against Russia, leading to gold prices reaching an all-time high of $2,480 per ounce on July 17, 2024. In U.S. the Fed is expected to cut the Fed funds rate, but inflation may remain steady, leading to lower real interest rates. This scenario benefits gold as the opportunity cost of holding non-interest-bearing gold decreases compared to cash and bonds. Additionally, a decline in U.S. real interest rates may weaken the U.S. dollar, making gold, which is globally priced in dollars, more attractive.
Owning gold directly provides a “store of value” but offers limited returns rather than generate substantial gains like equities. However, other than its appeal in its ability to preserve value, many investors view it as a hedge against economic troubles rather than a high-return investment. So an investor otherwise seeking gold as a soaring investment would be disappointed in the longer term as it doesn’t appreciate by much as gold has risen less than 300% in a century with annualized real returns of 1.34%, adjusted for inflation. Therefore investors looking for a more aggressive approach, aim for gold mining stocks that provide leverage to the gold price that yields returns surpassing those of the underlying commodity.
Despite this leverage, the underlying stock valuations will consider future cash flows and market volatility of the gold as well as the consensus price estimates by market participants. Nonetheless, gold miner stocks should be more volatile than gold itself, offering greater returns if the investor’s thesis on rising gold prices is correct.
Regardless of gold prices rising over the last 15 years, gold mining ETFs and major miners (Agnico, Newmont, Barrick) have underperformed compared to physical gold. Although some companies covered in this article have succeeded, the gold mining sector requires careful scrutiny beyond just reserves and production. Like any other investment that is carefully analyzed mining companies need to be analysed based on management, capital allocation, and geopolitical risk. It is also because of these factors that gold mining companies are unable to reach their potential as viable investments.
Drills extracting gold from a gold mine, revealing the company’s gold mining operation.
Methodology
To curate our list of 10 Best Gold Mining Companies to Invest in, we gathered a list of all companies using the holdings of gold miners ETFs. We then further narrowed down on the basis of their upside potential. With this let’s now jump to our list of the 10 Best Gold Mining Companies to Invest in.
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10. Franco-Nevada Corp (NYSE:FNV)
Current Price: $125.71
Upside Potential: 11%
Franco-Nevada Corp (NYSE:FNV), a Canadian gold mining company, recently gained attention due to its strong Q1 performance. The company reported an adjusted EPS of $0.76, exceeding estimates by $0.05, although its revenue decreased by 7.1% year-over-year to $256.8 million, surpassing expectations by $7.77 million. Analysts consider Franco-Nevada less volatile compared to traditional gold miners due to its royalty and streaming model, which involves providing upfront capital to miners in exchange for discounted returns and lower-cost gold production rights. The company is also expanding its portfolio, holding over 400 assets. In 2023, Franco-Nevada acquired new royalty interests in Canada, Chile, Australia, and the US. For 2024, it anticipates producing 540,000 gold equivalent ounces, reflecting a 10% organic growth. The average analyst price target for Franco-Nevada is $143, indicating a potential upside of 15% from its current price.
White Falcon Capital Management stated the following regarding Franco-Nevada Corporation (NYSE:FNV) in its first quarter 2024 investor letter:
“Due to the rally in gold, the weight of precious metal royalty companies is on the higher side of our typical 10-15% allocation to them. We recently wrote an article for the Globe & Mail on Franco-Nevada Corporation (NYSE:FNV), a portfolio company, that can be accessed on our blog. We believe that royalties are a better way to express an opinion on gold as they pay a dividend and have optionality on both the price of gold as well as additional discoveries by operating companies. With debt and deficits increasing by the minute and the central bank’s inability to control inflation, we believe that it is prudent to have an ‘outside the system’ asset in the portfolio that can protect our purchasing power over time.”
9. Agnico Eagle Mines Limited (NYSE:AEM)
Current Price: $74.75
Upside Potential: 12%
Agnico Eagle Mines Limited (NYSE:AEM), a major player in the Canadian gold industry, manages mining operations across Canada, Finland, Australia, and Mexico, while also conducting exploration and development endeavors in the United States. The company adopts a strategy of retaining complete exposure to rising gold prices by abstaining from forward gold sales. Analysts have overwhelmingly endorsed the company’s shares, with an average Strong Buy rating. Agnico Eagle Mines Limited (NYSE) is a Canadian gold mining company with operations in Canada, Australia, Finland, and Mexico. In Q1 2024, its revenue soared to over $1.8 billion, a 21% increase from Q1 2023, driven by robust production from Canadian Malartic, Macassa, and Nunavut operations, and high gold prices. This resulted in a record $396 million in free cash flows, up 50%, and $1 billion in margins, largely due to the Detour Lake and Canadian Malartic mines.
However, the company anticipates an increase in all-in sustaining costs from $1,191 per ounce in Q1 2024 to between $1,200 and $1,250, which could impact profitability and cash flows. Agnico Eagle also increased its stake in Maple Gold Mines from 12% to 19.9% in June 2024 and is advancing projects like the Odyssey mine at the Canadian Malartic complex, expected to produce 500,000 ounces by 2030.
8. Wheaton Precious Metals Corp. (NYSE:WPM)
Current Price: $58.53
Upside Potential: 13%
Wheaton Precious Metals Corp. (NYSE:WPM) is a highly profitable precious metals streaming company, boasting a trailing twelve-month profit margin of 52.92% as of May 2024. It sources gold, silver, palladium, and cobalt from 18 operating mines. The company is well-regarded for its strong performance and growth prospects. It projects gold production of 850,000 ounces through 2029 from both operating and developing projects, including Salobo, Antamina, and Blackwater. In Q1 2024, Wheaton saw a 31% increase in gold equivalent ounces and a 6% rise in realized gold prices, resulting in a $297 million sales value and an EPS of $0.36, surpassing analysts’ expectations.
Wheaton is also investing in high-growth projects like Tanami Expansion 2 and Cadia Block Caves, and benefits from Newmont’s recent acquisition of Newcrest, which is expected to yield $500 million in annual synergies by 2025. The stock has performed strongly, with gains of 17.85% over the past month, 25.7% year-to-date, and 38.3% over the last year.
7. Newmont Corporation (NYSE:NEM)
Current Price: $47.36
Upside Potential: 14%
Newmont Corporation (NYSE:NEM) is the world’s leading gold producer, mining copper, silver, zinc, and lead as well. Its assets and operations include favorable mining regions in Africa, Australia, Latin America & Caribbean, North America, and Papua New Guinea. Founded in 1921, Newmont has been publicly traded since 1925 and is the only gold producer listed in the S&P 500.
Newmont Corporation (NYSE:NEM) reported an adjusted EPS of $0.55 per share in Q1 2024, up from $0.40 a year earlier. The increase was driven by higher gold production of 1.7 million ounces compared to 1.3 million ounces in the same period last year, and rising gold prices. This resulted in an adjusted net income of $630 million, a 97% increase year-over-year.
Following the acquisition of Newcrest, Newmont’s consolidated mineral reserves grew to 128 million ounces, a 40% increase from the previous year, making its reserves almost equal to the combined reserves of Barrick Gold and Agnico Eagle. This substantial reserve base underscores Newmont’s long-term strength and growth potential.
The new Goldrush mine, in which Newmont has a 38.5% stake, is also ramping up production, with an expected output of 130,000 ounces in 2024, potentially reaching 400,000 ounces by 2028.
Newmont offers a robust dividend, with an annual yield of 2.27%, paying out $0.25 per share in the first quarter of 2024. The company’s strong cash position, bolstered by $1.4 billion generated in the quarter due to higher gold prices, highlights its growth prospects.
The stock has risen 15.3% in the past month, with analysts setting a target price of $49.85, indicating a potential upside of 12.96% from its current price of $44.13. Additionally, there has been an increase of eight hedge fund holders, bringing the total investment to $925 million as of Q1 2024.
6. Kinross Gold Corporation (NYSE:KGC)
Current Price: $8.92
Upside Potential: 17.5%
Kinross Gold Corporation (NYSE:KGC) operates mines in the U.S., Brazil, Chile, Mauritania, and Canada. In Q1 2024, it produced 522,000 ounces of gold, benefiting from increased gold prices. The company achieved a per ounce profit margin of $1,088 by maintaining consistent sales costs. Kinross ended the quarter with $407 million in cash, generating $145 million in free cash flow, positioning itself well for debt repayment and future growth. The company is on track to meet its full-year production and cost guidance. Additionally, Kinross is expanding its portfolio by potentially acquiring a 75% stake in a project with Riley Gold, following a $20 million investment.
5. Alamos Gold Inc. (NYSE:AGI)
Current Price: $17
Upside Potential: 19.3%
Alamos Gold Inc (NYSE: AGI) produced approximately 135,700 ounces of gold in Q1, marking a 6% increase from the same period last year and reported quarterly revenue of $280 million, a 10% increase from the previous year, and generated $24 million in free cash flow. The company is expanding its operations with the acquisition of Argonaut Gold’s Magino Mine, creating a Tier-1 scale mining complex in Ontario, Canada. This is expected to increase production to 600,000 ounces annually in the near term, potentially reaching 900,000 ounces long-term. This acquisition, including Argonaut Gold, is anticipated to generate $515 million in pretax synergies. Analysts predict Alamos Gold Inc will generate around $720 million in free cash flow by FY2028, driven by strong production at its PDA (Mulatos), Young-Davidson, Island Complex (Island/Magino), and Lynn Lake projects. Consequently, Wall Street analysts are optimistic about the stock’s future performance.
4. Royal Gold, Inc. (NASDAQ:RGLD)
Current Price: $137.88
Upside Potential: 21%
Royal Gold, Inc.(NASDAQ:RGLD), a precious metal streaming company with royalty interests in mines worldwide, experienced a 10% increase in revenue for its gold segment despite a 13% overall revenue decline from the previous year’s record high quarter. This was due to higher gold prices and reduced contributions from certain mines like Mount Milligan and Cortez. The company achieved its best quarterly operating cash flow of $138 million, a 27% increase, thanks to payments from Mount Milligan and capitalized interest from loan repayments. The stock has risen by 15.65% YTD and 15.4% in the past month, supported by analysts’ projections of a 28.1% EPS increase in 2024 and a 25.1% revenue rise in 2025. New ventures at Mara Rosa in Brazil and Cote Gold in Ontario, along with the Goldrush mine at Cortez, are expected to boost production. Analysts have set a price target of $152, a 16.37% potential increase from its current price of $130.62. With 31 hedge fund holders owning stakes worth $321 million, the company reported a 2.6% increase in Q2 gold production and higher realized gold prices. Investors are anticipating further details in August 2024.
Royal Gold Inc (NASDAQ:RGLD) talked in detail about its 2024 guidance in its latest earnings call:
“Analysts believe Royal Gold is attractively valued based on its Net Asset Value (NAV), a common valuation metric using in the gold streaming industry. The stock is currently trading at around 18 times FY’2024 FCF , well below its average free cash flow multiple of 22. This makes Royal Gold an attractively valued gold mining stock.”
3. Barrick Gold Corporation (NYSE:GOLD)
Current Price: $18.38
Upside Potential: 22%
Barrick Gold Corporation (NYSE:GOLD) engages in the exploration, mine development, production, and sale of gold and copper properties. This leading international gold mining enterprise, headquartered in Toronto, Canada, holds a substantial footprint in the global mining sector. Barrick Gold Corporation (NYSE:GOLD) is the top 11th mining company in the world by revenue, operating in over 13 countries. In Q1 2024, Barrick Gold Corporation saw a significant 143% increase in year-over-year net earnings per share, with adjusted EPS rising to $0.19 from $0.14 in Q1 2023, surpassing analysts’ expectations. The company’s EBITDA margin improved by 5%, reaching 41%, and operating cash flow was strong at $760 million. This performance was driven by higher gold prices and the successful ramp-up of the Goldrush mine. The Goldrush mine at Cortez, where Barrick holds a 61.5% stake, began production with an initial output of 130,000 ounces expected in 2024, projected to reach 400,000 ounces by 2028. Following the positive Q1 earnings announcement, Barrick’s stock rose 14% in the past month. Barrick’s growth continued with Q2 2024 production reaching 948,000 ounces of gold, up from 940,000 ounces in Q1, driven by increased production at Turquoise Ridge, Porgera, Tongon, North Mara, and Kibali. The average market price of gold in Q2 was $2,338 per ounce. With rising production, increasing gold prices, and decreasing costs, Barrick’s growth outlook remains strong for the upcoming quarters.
Old West Management made the following comment about Barrick Gold Corporation (NYSE:GOLD) in its Q4 2022 investor letter:
“Barrick Gold Corporation (NYSE:GOLD) is the second largest gold miner in the world, with operations in the U.S., Canada, Africa, South America and more. Barrick is also a major copper producer. Former Goldman Sachs executive John Thornton took control of the company in 2012 and quickly realized he wanted someone with a mining background to run the company. Mark Bristow, at that time CEO of Randgold, was considered one of the best gold mining executives in the world. Thornton wanted Bristow so badly Barrick bought Randgold in 2018. Bristow, who is South African, had extensive experience operating mines throughout Africa, and in fact would fly his own single engine plane to visit mines. He has his PhD in Geology, and he has flourished running Barrick the past five years.
Barrick is estimated to have $1.6 billion of net income this year on $11.5 billion of revenue. Net Income has been growing 15% per year. The stock trades at $19.00 per share which is 16 times forward earnings, and the stock has a 3.15% dividend yield. Barrick has a fortress balance sheet with $5.7 billion in cash and $5 billion of long term debt, which is only one time EBITDA.”
2. Sandstorm Gold Ltd. (NYSE:SAND)
Current Price: $ 5.75
Upside Potential: 29%
Sandstorm Gold Ltd. (NYSE:SAND) is a gold royalty company that secures the right to a share of a mine’s gold production by providing upfront funding to miners. The company has acquired 230 royalties on mining projects worldwide.
In the first quarter of 2024, Sandstorm Gold reported a decrease in revenue and income, with revenue at $42.8 million compared to $44 million in the first quarter of 2023, and a net loss of $3.9 million compared to a net income of $15.6 million a year earlier. This decline was attributed to a 12% reduction in gold equivalent ounces (GEO) sold, a $10 million decrease in other income related to royalty payments, and a loss from the fair value assessment of a debenture investment.
Despite this, Sandstorm Gold has seen its share price increase by 4.5% over the past month and 10.71% year-to-date (YTD). Analysts are optimistic about the stock, predicting it could rise to $7.44 from its current price of $5.58, representing a potential upside of 33.3%. Additionally, the stock’s popularity among hedge fund holders has grown, with four more funds investing in the company, bringing the total to 16, holding $72.4 million as of Q1 2024.
1.B2Gold Corp. (NYSE:BTG)
Current Price: $3.00
Upside Potential: 34%
B2Gold Corp. (NYSE:BTG) is a Canadian company specializing in the exploration and development of gold resources. With operations spanning multiple countries, including Colombia, Mali, Namibia, the Philippines, Uzbekistan, Finland, and Canada, the company engages in exploration, development, and production activities. In Q1 2024, the company achieved an adjusted EPS of $0.06, surpassing analysts’ expectations, with gold production of 225,716 ounces aligning with guidance. The company’s strong liquidity position was evidenced by $629 million in working capital and $568 million in cash and cash equivalents, boosted by $507 million in operating cash flows. A dividend of $0.04 was declared.
In June 2024, the company formed Versamet Royalties with Sandbox Royalties, expected to generate $30 million in revenue by 2026, up from the current $10 million. Gold production is forecasted to increase to between 860,000 and 940,000 ounces in 2024, compared to 590,243 ounces in 2023. Analysts project EPS to rise to $0.26 per share in 2024 from $0.01 in 2023, and revenue to grow to $2.52 billion in 2025 from $1.96 billion in 2024.
The stock rose 20% in the last month, with 11 analysts rating it as a buy and setting a target price of $4.37, indicating a 40.5% potential upside. However, the stock saw a 15.7% decline over the past year, partly due to a Q4 2023 net loss with an EPS of negative $0.09 per share, attributed to decreased gold production and sales volumes from 352,769 ounces and 339,355 ounces in Q4 2022 to 256,921 ounces and 270,611 ounces in Q4 2023.
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