When it comes to investing in the precious metals space, the following companies are good for your consideration. Analysts believe these stocks can experience some nice upside over the next 12 months.
Goldcorp Inc. (TSX:G)(NYSE:GG) is a large-cap gold producer with operations in seven countries. In the first quarter, Goldcorp produced 590,000 ounces of gold at all-in sustaining costs of US$810 per ounce, while the gold spot price trades close to US$1,300 per ounce. With increased production, management forecasts it will be able to reduce the all-in sustaining costs to US$700 per ounce by 2020.
Goldcorp is a well-run company with a clean balance sheet. This is evident by its investment-grade S&P credit rating of BBB+ and a debt-to-cap ratio of 13%.
Thomson Reuters Corp. has a 12-month mean target of US$18.60 per share on the stock, which represents near-term upside potential of almost 30%.
Wheaton Precious Metals Corp. (TSX:WPM)(NYSE:WPM) is a silver and gold streaming company. It doesn’t operate any mines. So, the costs of running its business remain relatively low and predictable compared to those of precious metals miners.
Wheaton Precious Metals employs a relatively safe business model, which gives investors exposure to the potential price increases of silver and gold while reducing the downside risk.
Wheaton Precious Metals agrees to buy all or a portion of silver or gold production from quality mines from stable regions around the world. The company pays an upfront fee and an additional payment for when the precious metals are delivered.
Higher precious metal prices and new streams going online will benefit the company and ultimately the stock.
Reuters has a 12-month mean target of US$27.40 per share on the stock, which implies near-term upside potential of about 25%.
Franco Nevada Corp. (TSX:FNV)(NYSE:FNV) is a leading gold-focused royalty and streaming company. So, its business model is similar to that of Wheaton Precious Metals, but Franco Nevada is a bigger company and has a more diversified portfolio.
Reuters has a 12-month mean target of US$85.50 per share on the stock, which represents near-term upside potential of almost 21%.
Investor takeaway
If gold prices go higher, all three of these stocks will benefit. It’s up to each individual investor to decide if they’re willing to take on a bit more risk by investing in Goldcorp for higher returns potential or invest in safer businesses such as Wheaton Precious Metals or Franco Nevada.
Notably, the stocks offer small dividends, which offer some returns while you hold the investments, unlike investing in physical gold or silver.
