It’s earnings season and a great opportunity to pick up stocks after evaluating them on how well they have managed to weather two quarters of businesses getting impacted by the pandemic. There is a very real danger of the second wave of the pandemic keeping the whole world locked indoors for another round, and it makes sense to look at companies that are well placed to weather the second storm.
Investors tend to look at safe havens in an uncertain environment when it comes to the pandemic and the possibility of an impending market crash. Gold is viewed as a safe option to mitigate risk and Kirkland Lake Gold (TSX:KL)(NYSE:KL) is one of the safest stocks there is today.
Kirkland Gold is recession-proof
Net earnings for Kirkland in Q3 came in at $202 million, an increase of 49% year over year and 14% on a sequential basis. Cash flow increased by 52% from the prior-year period to $275.7 million. The company has a very strong balance sheet and ended the September quarter with $848.5 million in cash, a $311.1 million, or 58%, increase from $537.4 million on June 30, 2020. Apart from the cash in hand, the company has zero debt on its balance sheet, which is a major achievement considering a lot of mining companies rely on debt to grow.
Kirkland has increased its dividend payouts to its shareholders. It doubled its quarterly dividend in Q1 to $0.125 per share. In October, it announced another dividend increase by 50% to $0.1875 per share for a quarter. Kirkland also reported new drill results from 135 holes of underground exploration drilling from the Macassa Mine in Kirkland Lake, Ontario. Tony Makuch, president, and CEO of Kirkland Lake Gold, was pleased with the results that prove there is considerable potential in the region.
Kirkland remains a strong stock to hold in a weak market.
A defensive bet
Hydro One (TSX:H) is one of the most reliable stocks out there. It is the largest power transmission and distribution company in Ontario, accounting for 98% of the region’s transmission. It has a recession-proof business model thanks to 99% of regulated revenues. These regulated revenues assure financial stability, which is worth its weight in gold in today’s uncertain environment.
Net income came in at $281 million for the third quarter of 2020 compared to $241 million in the same quarter of 2019 — an increase of over 16%. EPS increased to $0.47 from $0.4 in 2019. Revenues for Q3 2020 were higher by $54 million compared to 2019.
In October, Hydro One raised $1.2 billion of medium-term notes and plans to use the proceeds to pay maturing long-term and short-term debt and for general corporate purposes. The stock is pretty much immune to any volatility in the market, as proven with its beta of 0.2. It is not a high-flying stock that will make heads turn. It is a plodder, steadily going about its business. The company has a dividend payout of 3.42%, making it attractive to income investors as well.
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Fool contributor Aditya Raghunath has no position in any of the stocks mentioned.