There are a lot of exciting stocks out there these days. It’s undeniable that investors who’d bought shares of Shopify or Canopy more than a year ago are looking pretty pleased with themselves right about now.
But just because you haven’t hopped on latest bandwagon doesn’t mean you can’t still reap some rewards from the market. And now is the time to do it, while many industries remain in a bit of a slump.
There are a few commodities that people will always want, and minerals is one of them. It may fluctuate from time to time, but investors will always end up coming back for more.
So, if I’m putting my money on any mineral big guns, it’s going to be Barrick Gold (TSX: ABX)(NYSE: GOLD) and Cameco (TSX: CCO)(NYSE: CCJ).
Beating Barrick
Now, Barrick may not be that exciting, but it’s big. It is one of the world’s largest gold miners with mines in countries ranging from North and South America to Africa, the Middle East, and Australia. Not that it owns and operates all of them; instead it forms joint ventures to reduce risk on how much it invests. Most recently, Barrick has aligned itself with Reunion Gold to explore, develop, and mine for minerals in the Guiana Shield.
The company was pretty much forced to reduce risk a couple of years back when it really focused on reducing its debt. Since then, the company has transformed into a cost-saving machine. Its all-in sustaining costs are about $1,000, which is now in line with industry average, giving the company a profit of about $750 per ounce, though this could change.
An on-going trade war with China is certainly hurting gold miners everywhere, but Barrick is being hit hard. It’ll take a major financial shock or geopolitical crisis to give gold a huge bump, as people trade in cash for gold. But as I’ve mentioned, this stock should continue to see a slow but steady increase. And at about $17 a share, with a potential for $30 by the end of the year, the stock is a steal.
Counting on Cameco
It might be a bit hard to jump on the gold train right now, even though it’s so cheap. But another mineral that is full steam ahead these days is uranium. And at the head of that engine is Cameco.
The stock has come up about 60% in the last year alone! This comes from news that the supply glut of uranium after the Fukushima disaster could finally end. More than 50 new reactors are being built around the world, and that doesn’t include about 150 of those being fixed up for another uranium boom. China will be the number one buyer of uranium as the country ends its reliance on coal. With such a huge country looking for uranium, Cameco should see its shares soar.
Best of all, this stock is still completely undervalued right before its earnings report is due to be released. The stock is currently trading at about $17 per share, with its fair value closer to $25 per share. That price should only grow higher over the next few years as more and more reactors start up again.
