Solid Results Make This Gold Stock a Top Pick for Your RRSP

Agnico-Eagle Mines Ltd. (TSX:AEM) (NYSE:AEM) stock is soaring off of its strong quarterly results and continued operational excellence, making it a top pick for RRSP diversification.

| More on:
edit Business accounting concept, Business man using calculator with computer laptop, budget and loan paper in office.

Image source: Getty Images

RRSP investors, are you looking for quality stocks that you can tuck away into your portfolio and that will give you confidence that your money will grow well into your retirement years?

For this, you should not only gather a list of top quality stocks, but you should also make sure your portfolio provides adequate diversification so that it can outperform in different economic and market environments.

The gold sector is a necessary sector for proper portfolio diversification, as gold exposure acts as a safe haven in difficult economic times and moves counter to many of the other sectors.

So to start building an RRSP that will leave you feeling at ease, let’s look at Agnico-Eagle Mines Ltd. (TSX:AEM)(NYSE:AEM).

Lowest risk profile

Agnico-Eagle is a Canada-based intermediate gold producer with assets in low-risk, politically safe areas such as northwestern Quebec, northern Mexico, Finland, and Nunavut, and exploration activities in Canada, Europe, Latin America and the United States.

This goes a long way to making this gold stock a top stock for gold exposure in an RRSP portfolio, because as we have seen with many other gold companies, adverse political events can break a company and destroy shareholder value at a frightening pace.

Operational excellence

Agnico-Eagle continues to report better-than-expected results, and the latest quarter (Q1 2019) was no different).

EPS of $0.14 was almost two times higher than expectations, costs were significantly lower than expectations and new projects Ameruq and Meliadine remain on target and are positioned to send Agnico’s cash flow soaring.

Future growth coming on strong

At this point in time, Agnico is on the verge of starting production from its two new mines, Ameruq (Q3/19) and Meliadine (Q2/19), with estimates for production growth of 31% from 2017 to 2021, according to some analysts’ estimates.

This puts the company at the top of the list among gold producers of its size for production growth.

In addition to this, capex will be coming down after two of the highest capex spend years in the company’s history, so cash flows will increase significantly going forward.

Price of gold

The price of gold currently is at just over $1,280 per ounce, as interest rates that do not appear to be headed higher anytime soon have taken the pressure off of gold prices.

Recall that as the U.S. dollar falls, this makes gold (which is priced in U.S. dollars) less expensive in other currencies and therefore serves to increase demand.

For context, in late 2011, gold prices peaked at close to $1,900 per ounce, then retreated steadily to levels of just over $1,000 per ounce at the end of 2015.

Gold companies such as Agnico-Eagle have worked hard at reducing costs and improving balance sheets, which leaves them well positioned to reap the rewards of rising gold prices.

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 Karen Thomas has no position in any of the stocks mentioned.

More on Metals and Mining Stocks

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Friday, February 3

Large-cap corporate earnings will continue to be on TSX investors’ radar today.

Read more »

stock market
Metals and Mining Stocks

Why B2Gold Stock Stands out Among TSX Gold Miner Peers

The yellow metal has gained 18% since mid-October, while B2Gold stock has soared 30%.

Read more »

Engineers walk through a facility.
Metals and Mining Stocks

Why Cameco Stock Rose 22% in January 2023: Should You Buy Now?

Cameco (TSX:CCO) stock may be up right now, but how long can that last if uranium proves to be a…

Read more »

People walk into a dark underground mine.
Metals and Mining Stocks

2 Canadian Mining Stocks Worth a Dig in February 2023

These two Canadian mining stocks are among the best options for long-term investors looking to add some defensiveness right now.

Read more »

tsx today
Metals and Mining Stocks

TSX Today: What to Watch for in Stocks on Wednesday, February 1

The Fed’s interest rate decision and other important economic releases may keep TSX index highly volatile today.

Read more »

stock market
Metals and Mining Stocks

Gold Prices Are Rising: 2 Mining Stocks to Buy Today

Gold mining stocks offer a great way to tap into the resilience of this shiny metal in weak markets, but…

Read more »

A miner down a mine shaft
Metals and Mining Stocks

3 Growth Stocks to Buy With $1,000 Right Now

Each of these growth stocks have climbed over 50% in just six months! And there's still room to grow on…

Read more »

A tractor harvests lentils.
Metals and Mining Stocks

Here’s Why Nutrien Stock Is 1 of my Top Stock Picks This Year

Not all food stocks are equally attractive, and if you are in this for the long haul, it's a good…

Read more »