There’s a lot of value to unearth in Canada’s mining scene, especially after the latest pullback in various names that, prior to their declines, have rallied considerably on the back of various industry headwinds. Indeed, commodity prices fluctuate, sometimes wildly, and in both directions.
As an investor in the producers or the commodity futures, such rampant volatility has to be dealt with. Indeed, commodity investing isn’t everyone’s cup of tea. However, for those with strong stomachs, I think that betting on the well-run, decently valued miners can help boost your portfolio while providing a great deal of diversification.
Undoubtedly, introducing volatility to a portfolio is only worthwhile if you’re able to increase your shot at lowly correlated gains. Further, the commodity plays tend to swing wildly in both directions, making it opportunistic to be a net buyer following any massive downswing.
Of course, it’s hard to time bottoms, but for the long-term thinkers willing to invest for the longer run (think 10-20 years at a time), buying such plunges can be quite rewarding.
In this piece, we’ll examine two of my favourite Canadian mining companies: uranium producer Cameco (TSX: CCO) and Barrick Gold (TSX: ABX). As we approach the start of the second half, let’s find out which is the better long-term bet.
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Cameco
Cameco makes a strong case for why it should be the first commodity producer you look to for long-term growth. Indeed, the return of nuclear power could provide a huge tailwind that could last many years, if not indefinitely. Undoubtedly, nuclear energy is clean and as technologies (think artificial intelligence) advance, the risk and odds of nuclear incidents may very well decrease over time.
Of course, just because sentiment in nuclear power is increasing again doesn’t mean there won’t be another period of hesitancy over the power source. In any case, I think things are looking up for nuclear power. And to fuel the modern nuclear reactions being constructed, Cameco will need to do its part to produce more uranium.
As a top-tier miner with the wind at its back, I wouldn’t dare bet against the firm after its 426% surge in the last five years. If the nuclear renaissance continues into 2030, perhaps similar gains could be in the cards.
Barrick Gold
For investors who are looking to do some serious hedging, perhaps Barrick Gold is a shinier bet to make it through today’s uncertain market waters. While the tech sector is blasting off, with investors more than willing to speculate on meme stocks, questions linger as to how the enthusiasm will end.
I have no idea, but the recent pick-up in demand for gold, especially among young people (think millennials), bodes well for the future of the shiny yellow metal.
With gold recently pulling back a bit off its peak, I think the miners represent a great value, especially Barrick stock, which pays a 2.43% dividend yield for investors to wait while gold looks to resume its run after the latest cooldown. Though I wouldn’t back up the truck here, I would seriously consider a starter position after the latest 11% plunge off 52-week highs.
