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Many investors will tell you that you should diversify your investment portfolio not only through various stocks and bonds but also by investing in precious metals stocks.
Precious metals stocks can offer a hedge against inflation while providing good returns.
Quick Look at the Top Performing Precious Metals Stocks:
Deep Dive
When you’re considering the best precious metals stocks to invest in, you should look at a variety of factors, including interest rates, dividend yield, price target and market cap. While evaluating these stocks, you should also keep in mind that gold production and metals prices play a major role in how the market value of these stocks is determined year over year.
1. Torex Gold Resources Inc. (TSE: TXG)
Torex Gold Resources is a Canadian-based mining company whose primary operations take place in Mexico. It specializes in gold extraction.
One of the key indicators of Torex Gold’s potential as a precious metal stock is the high estimated five-year earnings per share (EPS) growth. The EPS is an important factor to pay attention to since it’s the portion of the company’s profit that is allocated to each share of common stock.
This metric helps predict the company’s profitability, and Torex Gold’s is expected to increase significantly this year. Additionally, Torex Gold has maintained a high, stable number of shares outstanding (the stock currently held by all shareholders).
2. Dundee Precious Metals Inc. (TSE: DPM)
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Another Canadian mining company on the list is Dundee Precious Metals Inc, which operates internationally and focuses on gold and base metals production.
Dundee is committed to sustainable mining practices and investing in community development. These values make it a favorable company to invest in for those concerned with environmental impact and social justice.
The company has a diversified portfolio of assets, including mines in Namibia (in southwest Africa) and Bulgaria (in southeast Europe). This is important when it comes to precious metals stocks because a diversified portfolio mitigates geopolitical risks to investments.
3. AngloGold Ashanti Limited (NYSE: AU)
AngloGold Ashanti Limited is headquartered in Johannesburg, South Africa, but operates globally, with diverse operations across the Americas, Australia and Africa. Like Dundee Precious Metals, its diversification not only reduces reliance on a single mining operation but also mitigates risk.
The company has a track record of steadily increasing EPS, which reflects how its profitability is growing. AngloGold doesn’t operate with fixed dividends.
4. Gold Fields Limited (NYSE: GFI)
Gold Fields Limited also has a global presence, including operations in Peru, Australia, and Ghana. What sets Gold Fields apart from the rest is its consistent performance:
- Increasing sales since 2016
- Steady EPS rise since 2019
It also offers a generous dividend yield which is one of the highest available in the industry. Like Dundee, it values sustainability and is committed to responsible mining practices, environmental conservation and community development.
5. Franco-Nevada Corp. (NYSE: FNV)
Franco-Nevada Corp. isn’t a traditional mining company. It doesn’t operate mines or conduct exploration. Instead, it provides upfront capital to miners in exchange for royalties or streams of revenue.
Its business model allows Franco-Nevada to have diversified, global exposure to gold. It has an impressive track record of steadily increasing earnings and sales for well over a decade.
6. Royal Gold Inc. (NASDAQ: RGLD)
Royal Gold is similar to Franco-Nevada. It’s an American-based precious metals streaming company, so it finances mining companies in exchange for buying metals at a predetermined price. Like Franco-Nevada, Royal Gold’s business model enables it to have a global reach with diversified mines across the continents.
7. DRDGOLD Ltd (NYSE: DRD)
DRDGOLD Ltd is a South African gold producer specializing in recovering gold by reprocessing waste rock to extract gold left behind from initial mining operations.
It has a unique approach to gold mining that allows for increased sustainability compared to traditional methods. DRDGOLD has also demonstrated consistent sales growth for nearly a decade.
Pros
Precious metals stocks have the potential to offer major returns, especially during economically difficult times like recessions and inflationary periods. In this way, precious metals offer a hedge against both currency devaluation and inflation.
As the demand for precious metals rises (whether as a store of value or industrial use, as precious metals are used in many industrial applications), you could benefit from increased stock prices.
Many precious metals stocks pay dividends. In contrast, if you were to purchase physical gold rather than gold stocks, you wouldn’t realize profits until you sold that physical gold.
Precious metal stocks offer liquidity and ease of trading since it’s easy to buy and sell shares on stock exchanges. It’s not so easy to do this with physical gold.
Where to Buy
If you’re interested in purchasing precious metals stocks, check out some of these reputable brokers.
Frequently Asked Questions
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There’s no single way to answer this, as the best precious metal for investment depends on both your individual investment goals and the overall market conditions. Gold is one of the most popular choices, but other precious metals like silver and palladium are also viable options.
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Precious metals stocks can certainly be good investments, but they also come with their own unique set of risks, like geopolitical events and fluctuations in metal prices. Before investing, conduct thorough research and diversify.
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The most undervalued precious metal changes dynamically due to market conditions. Many investors right now consider silver to be undervalued compared to gold since silver is used in more industrial applications, but this can change.
Best Precious Metals Stocks Methodology
When selecting the best precious metals stocks, it’s important to have a systematic approach by taking into consideration the following factors.
- Industry analysis: Monitor not only the supply and demand of the market but also geopolitical influences.
- Company performance: Research the company’s profitability, debt levels, cash reserves and revenue growth.
- Geographical diversification: Work with companies that have global operations to mitigate country-specific geopolitical risks.
- Dividend yield: Choose stocks that offer high dividends so you can have passive income and financial stability.
Precious metals stocks certainly have the potential for high returns, but like any other investment, they’re not without risk. Invest wisely and stay informed so you can experience success.