It’s natural for investors to want to find stocks that are going to be the best performers and add them to their portfolios towards the beginning of 2020.
There are plenty of potential candidates for which stocks could be the best and outperform the rest of the market in 2020 and a number of different industries that these businesses could come from.
After long and careful consideration, this stock not only offers safety and stability without much downside, but it also offers huge opportunities for growth. And depending how the year goes in financial markets, it could potentially return more than 100% for investors in 2020.
So, without further ado, my top performer for 2020 is Equinox Gold (TSX:EQX).
If fear continues to increase in the markets in 2020, and investors continue to rush to gold for safety as a bear market unfolds, Equinox will easily benefit.
Most investors are still underweight gold, so as the fear and uncertainty in the markets inevitably heats up, naturally, investors will need to gain more exposure, which will bring strong momentum to the shares.
Equinox should directly benefit, as it’s one of the most promising stocks in the gold mining sector.
It’s new to the scene, just commencing production in 2018, and it has already posted strong returns and secured tonnes of future growth.
It announced an exciting acquisition earlier in December that will further boost its position in the industry. The deal, which is more of a merger, is a zero-premium, all-stock deal which sees Equinox acquire Leagold Mining.
Looking at the numbers, it looks as though Leagold was a little more undervalued than Equinox, which — since it’s a zero-premium deal — helps to boost Equinox’s new value after the acquisition goes through.
The new company can expect to see roughly US$350 million in earnings before interest, taxes, depreciation, and amortization (EBITDA) in 2020, giving it a forward enterprise value-to-EBITDA ratio of just 4.7 times.
It also expects to generate $300 million in operating cash flow in 2020, and that’s at the conservative gold prices that we are seeing today.
This is just more positive news in addition to the attractive growth plans Equinox already had in place going forward.
Before the transaction, Equinox was ramping up production and aiming to get to one million ounces of production a year by 2023. The newly formed company will now have a 700,000-ounce annual production run rate at the end of 2019, and expects to produce one million ounces a year by 2021.
The new company now also has six producing mines, compared to Equinox’s previous two, and has four mines in the production stage, compared to Equinox having just one before the deal was made.
The deal is great and really improves the strength of an already great company, but that might not even be the biggest catalyst for Equinox’s growth.
As the price of gold is expected by many investors and economists to increase over the next few years, Equinox will be majorly rewarded. The company is highly leveraged to gold. In the third quarter, it recorded net margins of roughly 9%.
As the price of gold continues to increase, Equinox’s profit margins can be expected to expand greatly, which gives it the potential to grow its share price by 100% or more in the coming year.
It’s especially attractive, because Equinox is still trading for pretty cheap. So grab your shares as soon as possible, because gold rallies tend to come quickly, and you don’t want to miss this major opportunity for growth.
