If there’s one thing you should buy during a continent-wide recession, it’s gold.
This mineral is the king for a reason. People want it, people need it, and there will always be some place in this world that is willing to pay for it.
That’s why today I’m recommending two strong gold stocks that could seriously bring your portfolio to the next level: Agnico-Eagle Mines (TSX:AEM)(NYSE:AEM) and Wheaton Precious Metals (TSX:WPM)(NYSE:WPM).
Agnico This gold producer, developer, and explorer has a lot of things going for it. Its LaRonde mine in the Abitibi region of Quebec recently reported about 2.7 million ounces of proven gold.
This company has diverse mines around the world, stretching from Canada to Mexico and Latin America and across the ocean to Finland, which reflects the company’s low-risk focus on jurisdictions. But really it’s the Canadian mines that are the big producers right now, including LaRonde, MeadowBank, Meliadine, and Malartic mines.
It’s the mines up in Nunavut that the company is focusing on this year, betting that high-grade gold and slim competition will offer far more rewards than the risks of mining in such a remote location. And honestly, investors have been rewarded for their confidence in Agnico before.
The share price is well on its way to reaching those $70 highs of a few years ago, currently trading at $54.46 at the time of writing. The company’s earnings reports haven’t hurt either, with Agnico reporting revenue of $710.88 million, beating analyst estimates of $675.45 million. Its shares trade at 11 times forward cash flow, which is excellent compared to Barrick Gold’s at 8.6 and Newmont Goldcorp’s at 9.1.
That’s likely why this stock remains so undervalued, as there is just so much forward potential. In the next 12 months, the stock could reach that $70 range, making today look pretty good as an investment.
Wheaton Similar to Agnico, Wheaton also sells precious metals in Canada and beyond, though it operates a bit differently, providing a streaming service. This service is basically like offering a loan, where Wheaton offers up cash to miners who believe they have found an area that should produce gold and other/or other minerals. Then, Wheaton gets to purchase those minerals at less than wholesale prices once the miners have proven their worth. For example, Wheaton recently sealed a new deal with Hudbay Minerals and its Rosemont project for $307 million, with Wheaton entitled to 100% of gold and silver at $450 and $3.90 per ounce, respectively. That’s a huge drop from the sale price of $1,751 and $20.22.
Honestly, it’s a pretty ingenious idea, and investors have caught onto it pretty quickly. Wheaton in particular used to operate with “Silver” at the beginning of its name, but that has changed, as the company has significantly diversified to mine for pretty much anything.
But gold remains a top priority, with the miner producing 107,567 ounces in fiscal 2018, representing an improvement of 11.5% year over year. This has seen some great earnings reports come in, with the company reporting $259.85 million in revenue for the last quarter, beating analyst estimates of $254.10 million.
And just like Agnico, this stock is likely only going to go up. It currently trades at $28.81 at the time of writing, but that could reach $40 per share by this time next year.
Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. Wheaton Precious Metals is a recommendation of Stock Advisor Canada.
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