Steal This Brexit Investment Idea: It Might Make You Rich

A resurgent Britain might see an increase in gold sales; here’s why Goldcorp Inc. (TSX:G)(NYSE:GG) may be a compelling buy.

| More on:
Gold king in chess game face with the another silver team on black background (Concept for company strategy, business victory or decision)

Image source: Getty Images

From electric vehicles to insecurity about recession to a novel spin on Brexit investment, there’s a lot to be said for getting into precious metals. Let’s break down the stats for several of the best gold stocks before heading over to two tech-centric plays for a capital gains investor.

Brexit investors should be going for gold 

With a temporary reprieve from Brexit, the British economy is still chugging along; Canadian gold has been a key import, meanwhile, and should continue to be in theory. Whether a second referendum keeps the U.K. in the Eurozone, or whether an eventually divorced Britain forges stronger international trade agreements, a resurgent economy across the pond could see a rise in popularity for Canadian gold stocks, if this logic holds.

With one-year returns of 16.2% that beat the Canadian metals and mining industry average, Osisko Gold Royalties (TSX:OR)(NYSE:OR) had no trouble seeing off a -5.1% average among its peers for the same period and remains a strong play. While its negative one- and five-year past earnings-growth rates don’t speak to a strong recent track record, its balance sheet is good (see debt of 19.9% of net worth), and its P/B ratio is below market weight at 1.3 times book.

While Goldcorp’s (TSX:G)(NYSE:GG) one-year past earnings rate has been negative, its five-year average growth of 23.8% puts it ahead of Osisko Gold Royalties in terms of a track record, though Goldcorp has seen a significant amount of inside selling over the last three months. Still, trading at book value with a 28% discount off its future cash flow valuation and looking forward to a 125.8% expected annual growth in earnings, it’s a solid high-growth option.

Tech investors are digging the stats for this other metal

Palladium may sometimes get overlooked as an investment, but it’s the fourth most precious metal after gold, silver, and platinum. Used in a range of tech-related capacities, palladium could beat copper as the most accessible high-growth metal investment in years to come. Indeed, with a 27% increase in revenue compared to 2018, global e-sports is a billion-dollar industry alone and could drive palladium prices higher.

Down 1.18% in the last five days, North American Palladium (TSX:PDL) is a slight value opportunity at present. Its P/E of 6.1 times earnings and P/B of 1.3 times book are attractively low, while year-on-year returns of 16.2% show solid capital gains can be had; meanwhile, a 22% past-year ROE indicates high quality.

Investors concerned about risk should note that North American Palladium has been proactive about cleaning up its balance sheet, and its level of debt compared to net worth has been reduced over the past five years from 107.6% to just 8.9% today. A 4.2% expected annual growth in earnings is low, though remains positive and is subject to revision.

The bottom line

With tech looking set to outride any potential widespread market downturn, it would seem that certain mining stocks have an assuredly positive few years ahead. Paying a dividend yield of 1.36%, and with a 43.5% expected annual growth in earnings on the way, Osisko Gold Royalties is one of the strongest buys in the gold space, while North American Palladium is a strong play for a sometimes overlooked metal on the TSX index.

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 Victoria Hetherington has no position in any of the stocks mentioned.

More on Dividend Stocks

Question marks in a pile
Dividend Stocks

Where Will Brookfield Infrastructure Partners Stock Be in 5 Years?

Brookfield Infrastructure Partners (TSX:BIP.UN) kicked off 2024 with a bang. Where will it be in five years?

Read more »

Dividend Stocks

Golden Years Gain: Your CPP Benefits at Age 70

CPP users delaying pension payments until 70 will receive substantial monthly income streams in the golden years.

Read more »

data analytics, chart and graph icons with female hands typing on laptop in background
Dividend Stocks

3 Dividend Stocks You Can Safely Hold for Decades

Top TSX dividend stocks are on sale.

Read more »

Dividend Stocks

Where Will Canadian Utilities Stock Be in 5 Years?

Canadian Utilities (TSX:CSU) is a classic example of a stock where the dividend is all you get. Can the company…

Read more »

Man holding magnifying glass over a document
Dividend Stocks

2 Stocks I’m Watching for Big Passive Income

Consider Bank of Nova Scotia (TSX:BNS) and another top passive-income play to power your dividend portfolio!

Read more »

Target. Stand out from the crowd
Dividend Stocks

2 Dividend Stocks to Double Up on Right Now

These top TSX stocks have increased their dividends annually for decades.

Read more »

bulb idea thinking
Dividend Stocks

2 Supercharged Dividend Stocks to Buy if There’s a Stock Market Sell-Off

These two top stocks offer attractive yields, have reliable operations and are dividend aristocrats, making them two of the best…

Read more »

question marks written reminders tickets
Dividend Stocks

Better Buy: Loblaw Companies or Metro Stock?

Loblaw Companies (TSX:L) stock is riding on recent momentum. Meanwhile, Metro (TSX:MRU) is executing for future earnings growth.

Read more »