For Immediate Release
Chicago, IL – December 8, 2011 – Today, Zacks Investment Ideas
feature highlights Features: Agnico-Eagle Mines
Ltd. (AEM), Barrick Gold Corporation
(ABX), Yamana Gold, Inc. (AUY) and
Goldcorp Inc. (GG).
4 Gold Stocks to Shine Brighter
We hear hot debates on whether current gold prices represent a
bubble or if gold still deserves safe-haven status. The
historically high prices, volatility and nontraditional correlation
of gold with stocks have prompted these discussions. But arguments
both in favor of and against gold seem valid, confusing a buyer
seeking a hedge against inflation.
Let’s not go into the details of the gold price debate or take
sides. Instead, we suggest you to give attention to some gold
mining stocks that may hedge your investment against inflation and
offer more security than gold.
Some investors had bad experiences with gold mining stocks. The
common understanding that gold mining stocks are leveraged to the
price of gold had attracted many investors when the metal started
its bull run in 2002. But for several reasons (including heavy
share dilution, weak free cash flow, redirection of investors’
money toward gold and the absence of good managers after a 20-year
bear market), the stocks failed to keep up with the performance of
the metal. While gold prices appreciated about six folds over the
last 10-year bull period, gold mining stocks only approximately
doubled.
However, the industry landscape has changed a lot and some of
the gold miners are now well prepared to explore. Huge capital
investments by major mining companies have already started paying
off and many of the companies are witnessing higher profit margins
and free cash inflows, as a majority of the cost of production has
already been absorbed over the last 10 years.
Moreover, the bull market has attracted many mining experts and
managers who moved away from the industry during the 20-year bear
phase. This has increased chances of new discoveries even more.
Most importantly, some major gold miners are now playing smart
by converting their earnings into high dividends to attract
investors instead of reinvesting the money in exploration and
development. We expect these companies to continue offering high
dividends if they win investors’ confidence. This would, in turn,
help the miners keep afloat and concentrate more on production.
Also, we see little or perhaps no risk from these companies in
terms of dividend suspension in the near- to mid-term.
Consequently, the dividend income and price appreciation yield
from these shares could help you hedge your money against
inflation. So, betting on these undervalued gold stocks could make
you see more glitter than the yellow metal.
Let’s take a quick look on four dividend paying gold mining
stocks that could be better alternatives to gold for the long
haul.
Agnico-Eagle Mines Ltd. (AEM)
Founded in 1953, Agnico-Eagle Mines engages in the exploration,
development, and production of mineral properties in Canada,
Finland, and Mexico. The company primarily explores gold. Silver,
copper, zinc and lead are also on its mining list.
Annual Dividend: $0.62 per share
Dividend Yield: 1.50%
Dividend Increase (Year over Year): 250%
Expected Earnings Growth Rate: 10.00%
Expected Sales Growth Rate: 36.80%
Barrick Gold Corporation (ABX)
Established in 1983, Barrick Gold Corporation engages in the
production and sale of gold, as well as related activities such as
exploration and mine development. The company has a portfolio of 25
operating mines and a pipeline of projects located in North
America, South America, the Australia Pacific region and
Africa.
Annual Dividend: $0.60 per share
Dividend Yield: 1.20%
Dividend Increase (Year over Year): 50%
Expected Earnings Growth Rate: 58.21%
Expected Sales Growth Rate: 18.97%
Yamana Gold, Inc. (AUY)
Since its inception in 1980, Yamana Gold engages in the mining
of gold and other precious metals. It also carries out related
activities, including exploration, extraction, processing and
reclamation. The company's portfolio includes 7 operating gold
mines, namely Chapada; El Penón; Jacobina; Gualcamayo; Minera
Florida; Fazenda Brasileiro.
Annual Dividend: $0.20 per share
Dividend Yield: 1.20%
Dividend Increase (Year over Year): 67%
Expected Earnings Growth Rate: 14.90%
Expected Sales Growth Rate:
47.38%
Goldcorp Inc. (GG)
Founded in 1954, Goldcorp Inc. engages in the acquisition,
exploration, development and operation of precious metal properties
in Canada, the United States, Mexico, and Central and South
America. It produces and sells gold, silver, copper, lead and
zinc.
Annual Dividend: $0.41 per share
Dividend Yield: 0.80%
Dividend Increase (Year over Year): 133%
Expected Earnings Growth Rate: 64.72%
Expected Sales Growth Rate: 20.88%
In Conclusion
With all the arguments about gold having very few industrial
uses and being an idle asset since it does not pay dividends or
interest, you may have second thoughts about investing in gold. In
that case, the four stocks mentioned above could better serve your
investments purposes.
Most importantly, reserves or production of these four gold
mines remain unhedged, implying their strong revenue exposure to
the ongoing bullish gold market. Also, this ascertains that these
stocks do not need to spend billions of dollars to come out of
their bad hedge positions. So, there is a good chance of these
stocks overtaking gold itself as a successful investment.
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BARRICK GOLD CP (ABX): Free Stock Analysis Report
AGNICO EAGLE (AEM): Free Stock Analysis Report
YAMANA GOLD INC (AUY): Free Stock Analysis Report
GOLDCORP INC (GG): Free Stock Analysis Report
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