As a value-conscious investor, it can be even harder to put new money to work on stocks when the financial markets are going up, with broad strength across sectors. Indeed, many value-minded investors may feel better about doing a bit of buying on dips or when the market is in bear market mode.
These days, the bull market is going strong, and there are few to no signs that it’s about to slow down. Does that mean there aren’t any risks to keep note of? Definitely not. Geopolitical tensions have risen, as have valuations. As you may know, higher multiples and appreciation in the rearview mean less in the way of prospective returns moving forward.
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It’s hard for value hunters to be bullish nowadays
Either way, investors looking to time the next market dip may have to wait a while longer, especially as the U.S. Federal Reserve (often referred to simply as “the Fed”) cuts interest rates in a U.S. economy that’s quite resilient. Sure, the Canadian economy has its own set of challenges (a recession and stagflation cannot be ruled out, in my opinion), but the strength in the U.S. markets and hopes for some sort of trade deal could be enough to keep the TSX Index strong going into 2025’s conclusion. In short, it’s hard to be bullish while so many others are right now.
But, at the same time, there is relative value to be had out there, and in this piece, we’ll explore one TSX winner that I think has what it takes to keep gaining for investors. In a way, the rate of fundamental improvement may have exceeded the share price appreciation enjoyed in recent quarters.
Even as a value investor, it’s all right to buy a stock at a new high, provided you think it’s worth more than the current market price. So, as various pundits and market strategists look for more gains ahead, consider the following names, which I view as value investor-friendly in a seemingly overheated market.
Agnico Eagle Mines
Agnico Eagle Mines (TSX:AEM) has been enjoying the latest run-up in gold prices, to say the least. The well-run large-cap ($107 billion market cap) miner is up more than 80% year to date. Those are incredible gains for a name that’s seen its stock go parabolic at the start of 2024. Indeed, I’m not a fan of buying after parabolic moves.
However, when you look at the price of admission, the fast-growing dividend (1.1% yield), and momentum in the price of gold, as well as its very impressive production, I’m inclined to believe that the current melt-up is not only sustainable, but perhaps still in its earlier innings. The stock trades at just over 20 times forward price-to-earnings (P/E), which is not a bad deal for a fantastic gold miner that might make higher highs in the new year if gold keeps rocketing.
As one of the best levered ways to play gold prices, I’d look to average into a position here and now, just in case gold prices are in for a bit of a much-overdue correction over the near term. Either way, I think all signs point to higher gold prices and even higher share prices for its miners.
