Agnico-Eagle Mines (TSX:AEM) is arguably the world’s safest gold mine. This, along with the company’s excellent operational performance and strong opportunities, is being noticed by investors. In fact, Agnico-Eagle Mines stock has rallied significantly recently.
But what should we do with the stock in 2025? Let’s explore this.
Agnico-Eagle Mines: Up 90% since the end of 2023
As you know, gold stocks are considered defensive stocks. They are the place investors go to for a safe haven from inflation, political turmoil, and just general market uncertainty. This has been the environment recently, so it should be no real surprise that a gold stock like Agnico-Eagle has performed so well.
Whenever this type of stock price action occurs, we should always check on valuation. Has Agnico-Eagle stock’s valuation gotten out of hand? Well, the stock trades at 20 times this year’s expected earnings. It’s not a lofty valuation by any means. In fact, it’s quite reasonable given the value that the company generates and the attractiveness of this gold stock in today’s market.
Gold prices continue to show strength
Low or falling interest rates, geopolitical uncertainty, and market unease all bode well for the price of gold. This is what we have been living. These issues are intensifying, and this leads me to believe that gold prices will remain firm in 2025.
In fact, the price of gold has continued to rise in 2025 and now stands at roughly US$2,940 per ounce. This is 14% higher year to date and 80% higher than one year ago. As the macro environment remains conducive to strong gold prices, gold stocks like Agnico-Eagle should continue to fare well.
Agnico-Eagle Mines: The investment case
Agnico-Eagle has a strong investment case for 2025 that’s based on the macro environment that I just touched upon, as well as its own company-specific strengths.
These strengths include its geographical locations, its operational excellence, and its balance sheet strength. All of this has translated into record production, cash flows, and earnings, as well as strong shareholder returns.
For example, Agnico reported a record free cash flow of $2.1 billion in 2024. Also, costs were the lowest among its peer group, and earnings per share (EPS) of $4.23 blew past expectations and was 90% higher than the prior year.
Finally, Agnico-Eagle has 41 consecutive years of dividend payments under its belt. This is an impressive showing, given the volatility of gold prices and the capital intensity of its business. Today, the company’s balance sheet is in excellent shape, with little debt and a strong cash position.
Looking ahead to 2025, the company will benefit immensely if the price of gold continues to tread higher. Even if it stays where it is today, Agnico will see strong financials as a result. The company is well-positioned to continue to drive shareholder returns, strengthen its balance sheet, and reinvest in the business.
The bottom line
Agnico-Eagle is well set up to continue to prosper from strong gold prices. This, along with the company’s strong development pipeline, will likely keep the stock moving higher in the near to medium term.
