We recently compiled a list of the 10 Best Gold Stocks to Buy According to Reddit and Robinhood. In this article, we are going to take a look at where Wheaton Precious Metals Corp. (NYSE:WPM) stands against the other gold stocks.
Regarded as a safe investment option, hedging investors against inflation, Gold has been a highly demanded precious metal historically. As such, in 2023, the precious metal’s demand soared by 3% year-over-year (YoY), hitting the 4,899 tons mark. This is on the back of growing demand from emerging markets like India and China, who were responsible for 75% of this demand. This ever-increasing trajectory of demand is expected to continue in the current year as well which is going to be discussed below.
Amidst the inflationary state in the U.S. for the past while, and the resulting uncertainty in the market, gold has seen its prices rise in 2023, reaching its all-time high, on the back of 13% increase. The increase in demand mainly came from central banks, the industrial sector, and investors. A trend was also observed in 2023, wherein the global sovereign wealth funds were reported to be increasing their holdings in the precious metal.
The price of gold is a complex mechanism, as it is impacted by several factors like demand, market stability, and interest rates, to name a few. Nevertheless, several analysts are looking to a positive future for gold, as they expect the prices to be sitting somewhere between $2,421.00 and $2,651.00 (per ounce rate) by the current year end, as compared to its current price of $2374.31, as of writing this article.
This trend is also shaping up on the back of the Fed’s plans for a rate cut later in the year, as the gold prices usually have an inverse relationship with the market interest rate. As such, the rate cut that is expected to occur somewhere in September is also helping analysts forecast the precious metal’s price increase in 2024.
Following is what was spoken about the gold market by an analyst at PrimeXBT, Kathryn Davies, in June 2024:
“Gold has fallen from its all-time high of $2,222 after the SNB cut rates, boosting the USD. However, the gold price remains supported by the prospect of Federal Reserve rate cuts and a lower interest rate environment globally. Elevated geopolitical tensions and central bank purchases also keep demand high, and the price supported. As a result, Gold could see more all-time highs as we progress through 2024, rising to $2400 by the year’s end.”
In terms of the global market, China is a crucial player in the gold market – China is not only the largest producer of gold (producing 12% of gold in 2023), but also the largest consumer of gold, with its central bank, on its own, buying 225 tons of gold in 2023, up from 62 tons in the previous year. Analysts have attributed China’s massive buying of gold to the freezing of Russian assets by the U.S. and its allies, which China is attempting to hedge itself from by buying Gold – pushing up the gold prices by doing so.
Australia and Russia closely follow China in the gold production game; in 2023, China, Russia, and Australia recorded a gold production volume of 375 tons, 325 tons, and 314 tons, respectively. The U.S. was placed 5th on the same list created by Insider Monkey, with a production volume of 173 tons! To date, 209,000 tons of gold have been mined across the globe, equaling a value of massive $12 trillion!
Having discussed the expected future of gold prices, it’s time we explore the world of gold stocks, which directly correlate with the gold price trajectory. Thus, let’s now jump to our list of 10 Best Gold Stocks to Buy According to Reddit and Robinhood.
Methodology
Extensive research across the Reddit discussion forums, along with the Robinhood Index, helped us in curating our preliminary list of all the stocks discussed across the two sources. Based on the analysts’ sentiment regarding each stock across both sources, we assigned the Reddit score and Robinhood score to the stocks and ranked them based on the average score, which we will refer to as the Overall score. Lower the score, better the ranking of stock. For stocks with an equal Overall score, we used Reddit score as the tiebreaker.
The overall score was derived from the number of upticks on Reddit forums against the respective stocks, and the number of analysts assigning buy ratings to the respective stocks on Robinhood. We also peeked into Insider Monkey’s database that tracks the activity of 920 hedge funds, wherein we collected information about the hedge fund investors’ holders of all these stocks to reaffirm the respective stocks’ sentiment across the two sources.
Why are we interested in the stocks that hedge funds pile into? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A representation of gold bars, highlighting the companies success in their gold industry.
Wheaton Precious Metals Corp. (NYSE:WPM)
Overall Score: 3.5
Reddit Score: 5
Robinhood Score: 2
Number of Hedge Fund Holders: 27
Wheaton Precious Metals Corp. (NYSE:WPM), which is one of the most profitable companies with the highest profits margins in the world (TTM profit margin of 52.92%, as of 3rd May 2024), is a precious metals streaming company, buying gold, silver, palladium and cobalt from 18 operating mines’ operators.
It is one of the best gold stocks due to many factors. Firstly, Wheaton Precious Metals Corp. (NYSE:WPM) has forecasted gold production of 850,000 ounces till 2029 through its operating projects Salobo, Antamina, Peñasquito, Voisey’s Bay, and Marmato, and its developing projects including Blackwater, Platreef, Goose, Mineral Park, Fenix, Curipamba and Santo Domingo.
Secondly, these projections are on the back of their staggering performance in the 1st quarter of 2024, wherein they saw their gold equivalent ounces (GEOs) climbing 31% and realized gold equivalent price increasing 6%, helping them bag a sales value of $297 million, which itself was $82 million increase from the prior quarter, a major chunk of which was by the gold segment! As a result, their EPS was seen beating the analysts’ estimate, getting recorded at $0.36.
Moreover, given the company’s investments in several high-growth projects like Tanami Expansion 2 in Australia, Cadia Block Caves in Australia, and the Ahafo North expansion in Ghana, along with Newmont’s acquisition of Newcrest last year expecting to bring in annual synergies amounting to $500 million (pre-tax) by 2025, the stock is quite a good bet for investors. As such, the stock has been on a roll since a year, as it has recorded gains of 17.85%, 25.7%, and 38.3% on the 1-month basis, YTD basis, and in the last one year, respectively!
Thus, the stock is recommended by 76.5% of investors at Robinhood, who are strongly encouraging investors to buy the stock. Along with this, the stock is carrying a cool upside potential of 13.59%. Moreover, eight analysts are giving out an upside potential of the stock to be 29%!
Analysts at Reddit also believe in the trend to continue due to the company’s nature of being a royalty company instead of an individual mining company, which they believe is more yielding in terms of return, especially amidst the rising prices of gold.
Altogether, the stock’s outlook and performance have compelled 27 hedge fund investors to take a stake in the stock, worth a value of a whopping $598.1 million – also, justifying the stock’s place in our list of Best Gold Stocks to Buy According to Reddit and Robinhood.
Overall WPM ranks 2nd on our list of the best gold stocks to buy according to Reddit and Robinhood. You can visit 10 Best Gold Stocks to Buy According to Reddit and Robinhood to see the other gold stocks that are on hedge funds’ radar. While we acknowledge the potential of WPM as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than WPM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.