TSX mining and materials stocks are looking quite intriguing going into the new year. Though the start to November has seemed to have pushed investors to take on a more risk-on mentality (who can resist those solid quarterly earnings reports this season?), I’d argue that nothing beats diversification if you’re looking to weather a potential storm that may still be in the cards for 2024.
Indeed, all it took was two good days for market sentiment to shift so drastically. Indeed, lower rates could pave the way for an explosive rally in the battered growth plays. However, don’t discount the potential of the top mining plays while they’re still under a bit of pressure.
In this piece, we’ll look at two precious metal plays that I think could be in for an impressive finish to the year.
Without further ado, let’s have a closer look at shares of Barrick Gold (TSX: ABX) and Agnico Eagle Mines (TSX: AEM). Indeed, the price of gold has been heating up of late. And for investors looking to play some sort of breakout going into year’s end, I’d argue the following duo are priced with value in mind.
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Barrick Gold
Barrick is a top dog in the gold mining space. Despite recent strength in the price of gold, Barrick, alongside the broader basket of precious metal miners, is still a country mile away from their highs hit back in the glory days of 2020. Indeed, legendary investor Warren Buffett may not be a gold bug. However, I think a gold miner can be a huge benefit to any diversified portfolio, especially at these depressed levels.
First, the top-tier miners pay out dividends, making such gold plays a more productive way to hedge against a hailstorm. With a recession likely up ahead (even though it didn’t seem like that after Tuesday’s hot session for stocks), I’d argue that gold miners offer one of the better hedges in town at a price of admission that’s quite frankly absurdly depressed.
Recently, Barrick reported its third-quarter numbers, which were pretty decent. Profits for the quarter rose to US$368 million, up from the US$241 million posted last year. Adjusted earnings per share came in at $0.24.
All considered, ABX stock looks like a great low-cost way to play defence if you haven’t already battened down the hatches with your portfolio. With a 0.28 beta and a 2.43% dividend yield, Barrick looks like one a perfect play to play defence. As others get greedy again, playing defence may be key to doing well as a potential economic recession rears its ugly head.
Agnico Eagle Mines
Agnico Eagle Mines is a precious metals miner that’s down 10% year to date. The company recently reported decent third-quarter results. Costs crept higher for the quarter, but they seem very much manageable.
With an even more bountiful 3.29% dividend yield, AEM stock may stand out as an even more compelling stock to buy for the more income oriented. Like Barrick, Agnico Eagle is lowly correlated to the TSX Index, with a 0.89 beta. As gold flies higher, the path of least resistance for shares will be higher.
