High-growth investors may have already cottoned on to the fact that gold stocks are on a tear at the moment, with the rally led by some of the biggest metal and mining tickers on the TSX index. With some indications of good per-asset value (if somewhat wayward P/E ratios) and lots of upside on the way, the following three gold stocks are a great way to invest in the yellow stuff on Canada’s biggest stock market.
Barrick Gold (TSX: ABX)(NYSE: GOLD)
Never mind that Barrick Gold’s growth of earnings shrank by 130.4% in the past 12 months — its five-year average past earnings growth of 61.4% shows that a tough year didn’t put too much of a dent in this metal and mining stock’s outlook. Indeed, with a 40% expected annual growth in earnings on the way, Barrick Gold is looking like it may defy gravity for some time.
A negative P/E ratio leaves an accurate valuation up to a P/B of 1.6 and overvaluation by twice the future cash flow value. If you’re not too worried about intrinsic value, you may just want to buy for the upside. A so-so debt level of 53.8% of net worth indicates that there’s not too much to be worried about lurking in this company’s balance sheets, and there’s a dividend yield on offer of 1.32%, even if it’s not significantly high. Meanwhile, if you like to go by the confidence of those in the know, Barrick Gold has seen considerable levels of inside buying throughout the last 12 months.
Lundin Mining (TSX: LUN)
Though Lundin Mining’s past-year earnings growth shrank by 22.5%, its five-year average of 20.1% shows that it’s on a generally upwards trajectory. A 27.8% expected annual growth in earnings puts Lundin Mining back on this skyward track, making for a strong play if upside is your thing. In terms of inside buying, more shares have been bought than sold in the last three months, which is a great sign if you put any faith in the sentiments of insiders.
Goldcorp (TSX:G)(NYSE:GG)
Up 7.21% in the last five days, Goldcorp stock is enjoying the January gold rally, inching up from a hold to a moderate buy with today’s stats. While value may not be the big draw here, there’s more upside on offer, so let’s take a quick look.
A P/E of 116.4 times earnings makes a strange bedfellow with an industry-beating low P/B of 0.6 times book. A PEG of 1.4 likewise suggests that this stock is valued about where it should be. Goldcorp’s dividend yield of 0.78% is low, but at least it’s paying one. Meanwhile, a 84% expected annual growth in earnings makes this one of the most exciting mining stocks on the TSX index.
The bottom line
Lundin Mining looks the best buy, and it’s good value for money at the moment. There are lots of indications that back this up: look at a P/E of 10.7 and P/B of 0.9, for instance, as well as a discount of 31% against the future cash flow value. A trailing dividend yield of 2% gives investors a reason to stick around, while a satisfactory level of debt at 10.3% of the company’s net worth should reassure risk-averse investors that it’s safe to do so.
