Whether you want to admit it or not, a market crash is coming. In fact, several market crashes could be in the future of Canadian investors. Unfortunately, the pandemic wasn’t the only reason for a market downturn back in March. For about a year or more economists warned investors that a crash was coming. This was due to over a decade of taking on debt after the last financial crisis. Now, countries need to pay up.
Instead, what’s happened is countries continue to take on even more debt thanks to the pandemic. It’s estimated that by the end of the year global debt could reach $277 trillion! And that is why investors are going to the one thing that doesn’t change: gold.
Gold stocks are a safe haven for investors during a time of crisis. Even Warren Buffett has dipped his feet in the golden waters. But not all gold stocks are the same. In fact, there’s been a lot of movement lately investors should pay attention to.
Let’s start with an obvious choice. Even though Warren Buffett trimmed the stake he had in Barrick Gold Corp. (TSX:ABX)(NYSE:GOLD) recently, it’s still Buffett investing in gold — something he never had an intention of doing. But Barrick has made several acquisitions over the last few years that gives it strength and diversity. Its portfolio is something not even Buffett can ignore.
And you can’t ignore revenue either. Rewind to September 2019 and the company was making a year-over-year increase of about 2%. Fast forward to today and that’s skyrocketed to a 39% increase year over year! Earnings per share (EPS) is up 97%, and EBITDA up 53%. So things are clearly going well, including shares that are now up 27% from a year ago. That’s even after dropping from the Buffett sell.
If you’re a bit skeptical about Barrick’s future, even with it in Buffett’s portfolio, you can always count on streaming companies. Wheaton Precious Metals Corp. (TSX:WPM)(NYSE:WPM) takes a lot of risk out of the equation by providing start up costs for mines. Then when those mines strike gold (or other metals), the company gets to buy them below whole sale. Then, it sells off those minerals around the world.
The company has been steadily increasing revenue with the demand for gold. Most recently revenue was up about 24% year over year, with EPS up a crazy 3,145% and debt reduced by almost half over the last year. And again, shares are up a solid 49%, making this a great investment during a downturn.
Mines are changing. Acquisitions and mergers are happening all over the place, creating diverse portfolios around the world. A great example of this is Kirkland Lake Gold Ltd. (TSX:KL)(NYSE:KL). One of the company’s main goals is acquisition, to make it larger and better and become a huge competitor in the gold mining industry.
Revenue soared this year, with the company seeing year-over-year increases of about 75% during its latest earnings report. Yet the company trades about the same as it did a year ago. This could be due to optimism that investors can make gains on the wider market. However, it also makes it the perfect opportunity to buy this stock ahead of a crash.
Now is the time to prepare for a market crash with gold stocks. Each of these stocks are likely to jump by leaps and bounds during the next crash. Even Warren Buffett thinks so. So start your research and add these to your future gold stock watch list.
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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 Amy Legate-Wolfe has no position in any of the stocks mentioned.