The Canadian mining sector is one that long-term investors have benefited from retraining exposure to. The price of gold and other precious metals has continued to soar. That’s a dynamic that’s broadly lifted valuations in this space.
And for long-term gold bulls who think this rally can continue, there’s a lot to like about the following three companies I’m going to highlight in this piece. Whether you view gold as an inflation hedge, a central bank currency stabilizer, or an asset that institutions will want to continue to hold on their books, we need gold miners.
Here are three of the best in the business, I think, that are worth considering right now.
Endeavour Mining
One of the relatively overlooked and undervalued Canadian gold miners I’ve recently started to focus on is Endeavour Mining (TSX:EDV).
Some of my rationale for this pick has to do with Endeavour’s relatively small size. As a company worth around $14 billion at the time of writing, Endeavour stands to gain more from large swings (to the upside) in gold prices. And as one of the top Africa-focused gold miners in the market, Endeavour has one of the best growth outlooks of its peers. That’s key to my long-term thesis: buying this stock on dips and holding it for the long term.
Over the past year, shares of EDV stock have surged more than 80%. That’s a move I think can continue, particularly if gold prices remain robust.
With an industry-leading free cash flow yield of more than 17%, and a dividend of more than 2.8% to boot, Endeavour Mining remains one of my top picks in this space for investors looking for higher upside exposure to precious metals.
Barrick Mining
For investors looking for a bit more stability in their defensive portfolio allocation, Barrick Mining (TSX:ABX) is an excellent choice to consider right now, in my view.
Like the other gold miners on this list, Barrick has seen a market-beating move over the past year.
Barrick’s 12-month return is slightly less than that of Endeavour’s. But given Barrick’s massive size and market opportunity within the U.S. (key Nevada gold projects), there’s a lot to like about the relative regulatory safety this stock provides. And size does ultimately matter in terms of risk-adjusted returns. On that basis, Barrick is one of the best picks on this list.
With operating cash flow more than doubling in the first half of this year, the recent surge in gold prices should lead to even more upside in the quarters to come. This is a stock I think has excellent upside, particularly as production continues to ramp from the company’s core gold and copper operations at its tier-one Nevada mines.
Agnico Eagle
I was saving the best for last, as Agnico Eagle (TSX:AEM) remains one of my top picks for long-term investors seeking gold exposure right now.
What I like about Agnico Eagle relative to the other two picks on this list is the company’s mix of both high-production mining properties, as well as a number of properties that are more quality-centred. In other words, Agnico Eagle not only provides investors with production growth upside over time, but also an output per tonne mined that’s among the best in the business.
With the smallest dividend yield of the group, and a premium valuation, it’s hard to make the value argument that Agnico Eagle is the best positioned to outperform over the long term. That said, this stock’s triple-digit one-year return is the best on this list for a reason.
As one of the largest gold miners globally, I think Agnico Eagle could continue to capture global attention. For that reason, I think this is the easiest call to make on this list of top gold stocks investors should consider right now.
