Investment fads like cannabis and, more recently, non-fungible tokens may come and go, but TSX mining stocks have generally held their own over the last couple of years. Canadian miners could steadily grow the value of one’s retirement portfolio(s) over time and their regular dividends could help pay the bills, even. Two mining stocks, Agnico Eagle Mines (TSX:AEM) and Nutrien (TSX:NTR), seem like good buys in January 2023.
Let’s have a closer look.
Agnico Eagle Mines
Agnico Eagle Mines stock could do well in 2023 if gold prices remain steady or rise with higher global inflation. The company is a world-class gold stock with growing interests in Canada, Mexico, Finland, Mexico, and Australia. It produced 1.7 million gold ounces in 2020, and its 2022 production is estimated between 3.2 and 3.4 million ounces. Operations are growing through a mergers and acquisitions growth strategy, and there is more to come in 2023.
The company partnered with Pan American to acquire the assets of Yamana Gold in a November 2022 deal. The two giants will split Yamana’s profitable assets among themselves. Agnico Eagle gets Yamana Gold’s Canadian operations, while Pan American helps itself to Yamana’s Latin American assets.
Agnico Eagle could buy profitable mining operations from Yamana in 2023. profits should grow if gold prices rise in the face of stubborn global inflation. Gold is up more than 4% in price so far this year.
The company remains true to its strategy of expanding operations in low-risk mining jurisdictions. Low-risk assets are more valuable, as geopolitical tensions rise across the globe.
To boost shareholder returns, Agnico Eagle Mines engages in share repurchases. The gold miner pays a quarterly dividend that yields 3% annually. It increased the dividend by 44% over the past three years.
Nutrien is a global leader in crop nutrient production and supply. It’s a major producer of potash and phosphate in the world that unlocked new export markets, as the Russian-Ukraine conflict raged. I pray for an end to the bloody confrontation, but there aren’t any signs of an immediate end to the war yet. Nutrien could retain its new export markets in 2023.
Sales estimates for 2022 project a strong 40% year-over-year revenue growth. Although the company saw weak demand in North America and Brazil during the third quarter (and could write off some goodwill in the next financial report after rising interest rates raised discount rates), farmers still need inputs, and demand could eventually return in the near future.
Nutrien stock declined during the past six months, as investors adjusted their expectations. Interestingly, corporate insiders are actively accumulating more shares. Insiders scooped about 8,980 Nutrien shares during the past three months, with no sales recorded. They are bullish about Nutrien’s future. They believe shares are undervalued. They are like cooks who love to eat their own cooking. NTR insiders aren’t afraid of betting their personal assets investing in the company’s equity.
Why would they not be bullish? The business remains highly profitable. It should continue to generate positive free cash flow in 2023 and continue to repurchase its shares on the public market. Market consensus is for NTR to grow its free cash flow by 17.3% year over year to almost US$6.6 billion in 2023.
Cash is king, and free cash flow opens up new possibilities for Nutrien’s future and its capacity to reward shareholders with positive total returns. Nutrien pays a growing US$0.48 quarterly dividend that yields 2.8% annually.