1 “Golden” Opportunity You Shouldn’t Miss in the Market Sell-Off

Gold and stocks such as the Sandstorm Gold stock are making a comeback and presenting excellent opportunities to investors looking for safe havens during the coronavirus crisis.

| More on:

A recovery seems to be in store for one gold miner in the weeks to come. The name is not Barrick Gold — the world’s largest gold producer. Investors should include Vancouver-based Sandstorm Gold (TSX:SSL)(NYSE:SAND) in their watch lists during this period of heightened volatility.

Smooth operator

With the COVID-19 scare, investors are again searching to invest in safe-haven assets like gold. Sandstorm is a gold royalty company that focuses on operating mines or advanced-stage development projects. This $1.3 billion company buys not only gold but other metals from the companies.

Sandstorm achieved multiple milestones in the full year 2019. First up is the record revenue of $89.4 million, which is a 22% increase versus the full year 2018. The cash flows from operating activities also reached record levels as it grew by 23.6%. But the most impressive was the 177.9% growth in net income ($5.9 to $16.4 million).

The company’s streams and royalties are scattered. About 44% comes from South America, 22% in Canada, 18% from the rest of North America, and the remaining 15% are from other countries.

On February 21, 2020, Sandstorm formally traded on the NYSE, moving up from the NYSE America. On the TSX, the current price is $7.44 per share. Sandstorm’s year-to-date loss is 23.2%, although analysts covering the stock are forecasting a potential gain of 11.3% in the next 12 months.

Bull market

Whether you would like to believe it or not, the bull market for gold and silver began in June last year with the price breakouts. Notwithstanding the coronavirus, the gold price forecast in 2020 is mildly bullish. But in 2021, the precious metals could be testing all-time highs.

The bull market for gold is still in the early stage and the pace is slow. The speed could pick up in 2021. The gold price could climb to $1,750 per ounce this year then peak to $1,925 per ounce in the next.

As of this writing, the gold price is around $1,615 already and holding up while fighting through the coronavirus crisis. It’s too early to tell if the rescue package can sustain the market. If not, gold will skyrocket to prove that it’s still the safest asset to own. Gold stocks like Sandstorm could benefit from the resurgence.

Hedge versus market downturn

With the current gold price hovering over $1,600, the year-end price projection of $1,750 appears plausible. Even American banking giant Goldman Sachs has finally taken a bullish stance on the precious metal.

Gold could be making a comeback in this period of extreme market volatility. Its image as a safety to net investors is resonating again given the uncertainty. One potential catalyst to drive gold prices higher is the decline in gold extraction. Low production means higher demand.

The current gold situation should favour other TSX gold stocks, like Barrick, B2Gold, Franco Nevada, Kirkland Lake, and Yamana, among others.

However, the stellar performance of Sandstorm Gold makes it one of the most promising gold stocks in 2020. The opportunity is golden because you’ll have a hedge against a market downturn.

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 Christopher Liew has no position in any of the stocks mentioned.

More on Metals and Mining Stocks

nuclear power plant
Metals and Mining Stocks

For My Money, This Canadian Stock Is Hands-Down the Best Play of the Decade

Here's why Cameco stock has been a growth marvel in my long-term oriented portfolio and may remain so through 2030.

Read more »

Super sized rock trucks take a load of platinum rich rock into the crusher.
Stocks for Beginners

1 Practically Perfect Dividend Stock Down 7% to Buy for Long-term Income

If you're worried about the future of your investments, then now may be the time to grab onto a stock…

Read more »

Piggy bank and Canadian coins
Metals and Mining Stocks

Is It Too Late to Buy Silver Stocks?

First Majestic Silver (TSX:AG) and other hot silver plays could be ready for more gains in 2025.

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Stocks for Beginners

1 Magnificent Canadian Stock Down But Not Out to Buy Right Now

Don't count out this top basic materials stock, especially as copper prices soar.

Read more »

A worker wears a hard hat outside a mining operation.
Metals and Mining Stocks

Ivanhoe Mines: Buy, Sell, or Hold in July 2025?

Here's what to consider before trading Ivanhoe Mines stock this month. Watch out for July 30th!

Read more »

nugget gold
Metals and Mining Stocks

New Gold: Buy, Sell, or Hold in July 2025?

New Gold is a TSX mining stock that has returned over 100% to shareholders in the last 12 months. Is…

Read more »

todder holds a gold bar
Metals and Mining Stocks

1 Gold Mining Stock That’s My Inflation Protection Play

Agnico Eagle Mines stock has generated inflation-beating returns over the past decade, and the gold stock retains strong growth momentum

Read more »

space ship model takes off
Metals and Mining Stocks

Where Will Barrick Gold Be in 3 Years?

Let's dive into the three year outlook for Barrick Gold (TSX:ABX), a top global player in the increasingly competitive precious…

Read more »