3 Stocks to Target As Risk Returns to the Market

Barrick Gold Corp. (TSX:ABX)(NYSE:ABX) and other gold equities could be the big beneficiaries of a return to volatility in October.

| More on:

Volatility reared its head in the markets last week and investors felt the pinch. North American markets suffered their worst losses since early 2018, and the week left many wondering whether the choppy conditions would continue into the rest of October. Major indexes in the United States were down in early afternoon, trading on October 15 while the TSX also slipped into negative territory.

In the beginning of October, I’d discussed the frustrating path of gold stocks in 2018. It is befitting of the volatile nature of the asset class that the yellow metal has bounced back during the second major stock market sell-off of 2018. The spot price of gold rose back above $1,200 last week and was up nearly 1% in early afternoon trading today.

Barrick Gold (TSX:ABX)(NYSE:ABX) stock was up 2.71% in early afternoon trading on October 15. Shares have surged 12.2% over the past week and the stock is now up 23% month over month. Barrick recently acquired Randgold Resources to become the largest gold miner in the world. A return to volatility in the stock market could boost the spot price of gold to close the year.

Barrick is still in negative territory for 2018, and the stock could still be an attractive addition given the peaks it has reached in previous gold bull markets.

Yamana Gold (TSX:YRI)(NYSE:AUY) stock was up 2.62% in early afternoon trading on the same day. Shares have jumped 9.6% over the past week. The company is set to release its third-quarter results on October 25. The earnings report may be muted given gold’s poor performance over the spring and summer, but Yamana remains a top target as one of the largest miners in the world. Shares are still down 12.2% in 2018 so far.

Goldcorp (TSX:G)(NYSE:GG) stock was up 1.3% in early afternoon trading on October 15. Shares have jumped 8.9% over the past week. Like its peers, Goldcorp stumbled in the late summer and spiked last week.

The company is also expected to release its third-quarter results on October 25. Like Yamana and Barrick, Goldcorp is yet another industry leader that may be trading at a discount if gold can sustain its current momentum. Shares are down 12.5% in 2018 so far.

Can gold equities keep up this run?

The spot price of gold has been faced with many headwinds in 2018, and that perfect storm may be abetting as we head into the final months of the year. The U.S. economy has been a rock-solid performer this year, but growth is expected to dissipate next year and fall below 2% beginning in 2020. The market reaction to interest rate hikes could give central banks pause in the coming quarters, and the re-emergence of dollar weakness will only be a boon for gold.

No matter the market conditions, it’s usually wise for investors to maintain a small portion of gold holdings in their portfolios. The yellow metal has been hammered since 2017 on a strong U.S. dollar and improved economic conditions, but financial storm clouds are building that could see the safe haven return to prominence.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Ambrose O'Callaghan has no position in any of the stocks mentioned.

More on Investing

A cannabis plant grows.
Cannabis Stocks

Canopy Growth Stock Is Rising But I’m Worried About This One Thing

Canopy Growth stock is soaring as the legalization effort makes real progress in both Germany and the United States.

Read more »

young woman celebrating a victory while working with mobile phone in the office
Investing

3 Roaring Stocks to Hold for the Next 20 Years

These top TSX stocks are excellent long-term buys, given their multi-year growth potential and solid underlying businesses.

Read more »

Two seniors float in a pool.
Dividend Stocks

TFSA: How to Earn $1,890 in Annual Tax-Free Income

Plunk these investments into your TFSA to earn passive income and avoid the taxman.

Read more »

grow dividends
Investing

Here’s My Top 3 TSX Stocks to Buy Right Now

Even though the TSX has been rising, there are still some good bargains out there. Here are three top compounding…

Read more »

Target. Stand out from the crowd
Investing

Prediction: This Canadian Growth Stock Could Double by 2030

Alimentation Couche-Tard (TSX:ATD) is a top growth stock that could do well over the next six or so years.

Read more »

Businessman holding AI cloud
Tech Stocks

Could Investing $20,000 in Nvidia Make You a Millionaire?

Nvidia stock has made investors millionaires in the last 10 years. Is it too late to invest to become a…

Read more »

Engineers walk through a facility.
Dividend Stocks

1 TSX Stock I Wouldn’t Touch With a 10-Foot Pole

AtkinsRéalis (TSX:ATRL) is one TSX stock I'd never invest in.

Read more »

money cash dividends
Stocks for Beginners

Have $500? 3 Absurdly Cheap Stocks Long-Term Investors Should Buy Right Now

If you're looking for cheap stocks, these three have a huge future ahead of them, all while costing far less…

Read more »