The ongoing geopolitical unrest across the Middle East, Eastern Europe, and East Asia has spurred a climate of uncertainty, driving investors towards the relative safety of gold. The recent conflicts in the Middle East alone catalyzed a significant uptick in gold prices, marking its most lucrative week in seven months. Gold price ranged from $1,909.20 to $1,983.48 per ounce throughout October, with an average price of $1,946.54 per ounce. Over the past month, the commodity has gained by 5.84%
In Q3 2023, gold demand outpaced its five-year average by 8%, although it was 6% weaker year-over-year. According to the World Gold Council’s data series, central banks saw the third strongest quarter of net buying, reaching 337 tonnes. year-to-date demand has reached a record 800 tonnes. This strong buying streak from central banks is expected to stay on course for the remainder of the year.
The compelling confluence of geopolitical tensions, robust market demand, and a strong valuation appeal makes a compelling case for considering gold stocks. There’s a tantalizing prospect of riding the wave of gold’s potential upswing, and our curated watchlist is primed to guide you through the top gold stocks to consider right now.Â
Franco-Nevada Corporation (FNV)
As we approach the end of October, it’s time to spotlight a noteworthy player in the gold industry, Franco-Nevada Corporation. With a solid market capitalization standing at around $25 billion, this royalty and stream company has been on the radar of many savvy investors. Here are some compelling points to consider:
- Price Levels and Performance: FNV is currently trading around $126.27, and despite being -21.69% off its 52-week high ($161.25), it’s shown resilience by staying 8.39% above its 52-week low ($116.50)​​. Although the stock has seen a price decrease of -7.48% over the year, the more recent trading session witnessed an upswing, peaking at $135.87 from an opening of $135.70, and closing at $137.47​​.
- Trading Volume: The trading volume of Franco-Nevada’s shares in the Basic Materials sector reached around 2.17 million for the day, significantly higher than the average daily volume of 0.44 million over the last three months​​.
- Financial Health: The company boasts a healthy debt-to-equity ratio of 0.00, indicating robust financial stability. This factor can be particularly reassuring for investors in a market where many companies are burdened with high levels of debt​.
- Market Capitalization and Valuation: With a market cap of $25.60 billion and a P/E ratio of 38.63, Franco-Nevada holds a substantial position in the market​​. Though the P/E ratio is on the higher side, the unique business model of royalty and streaming may provide a level of stability compared to traditional mining operations.
- Upcoming Earnings Report: The company is slated to release its Q3 2023 results on November 8th, post-market closed​​ which could potentially be a catalyst for the stock, depending on the financial performance revealed.
- Long-term Growth Prospects: There’s an optimistic outlook among some analysts for a price target of $161.57, indicating potential upside from the current price levels​​.
- Market Cap Growth: Over the past year, Franco-Nevada’s market cap has grown by 14.44%, signaling a positive trend in valuation and investor confidence​​.
Barrick Gold Corporation (GOLD)
- Recent Performance: Barrick’s Q3 2023 preliminary results reflect sales of 1.03 million ounces of gold and 112 million pounds of copper, marking a nearly 3% sequential increase in gold output, primarily driven by higher production at its Cortez mines in Nevada​​.
- Although the quarter’s gold production was slightly lower than anticipated due to equipment design issues at the Pueblo Viejo mine, the company projects a significant uptick in Q4 production volume​​.
- Financials: The company’s average realized gold prices surged by 6% to $1,972 per ounce from a year earlier, and it’s anticipated that the all-in-sustaining costs (AISC) per ounce of gold will fall about 6-8% from the previous quarter​​. Barrick is projected to post a quarterly earnings of $0.21 per share in its upcoming report, depicting a year-over-year growth of +61.5%​​.
- Investment in Future Growth: Barrick recently unveiled plans to invest nearly $2 billion in the Lumwana mine to extend its life span until 2060, and it’s open to the idea of Saudi wealth funds purchasing a stake in Pakistan’s Reko Diq mine, indicating a long-term vision for growth​​.
- Valuation Appeal: Currently trading around 21.30% below its 52-week high, Barrick’s stock presents a possible value buy, with analysts having a moderate buy rating and a twelve-month price prediction average of $22.00, hinting at substantial upside potential​​.
- Upcoming Earnings Report: Barrick is set to release its Q3 2023 results on November 2, 2023, which might provide further insights into its operational efficiency and future outlook​​.
Torex Gold Resources Inc (TORXF)
- Strong Projected Growth: Torex Gold boasts a stellar 5-year Forward EPS (Earnings Per Share) Growth Estimate of 182%, highlighting a robust growth trajectory. The company has been on an upward trend with its earnings since 2018, despite the occasional erratic earnings which is a common trait in the gold industry​​.
- Consistent Sales Uptrend: The company has enjoyed 7 years of rising sales, which is a positive indicator of its operational efficiency and market demand​2.
- Solid Solvency Ratio: With a solvency ratio of 214%, Torex Gold is in a strong financial position. This high solvency ratio indicates that the company generates sufficient cash flow to cover its debts, which is crucial for its long-term stability and sustainability​​.
- Attractive Valuation: The stock is currently trading near $18, sitting in the middle of its 10-year trading range of roughly $8 to $35. The forward P/E ratio of 19.5 reflects the stock’s position within its range and is quite attractive compared to its historical P/E values which have swung between three and over 100 in the last five years​​.
- Stable Share Structure: Unlike many other gold companies, Torex has not increased its shares outstanding in the recent years. This is a favorable move as it avoids dilution of existing shareholders, which is often a concern in this sector​​.
Torex Gold Resources Inc operates primarily in Mexico while its shares are traded on the Toronto Stock Exchange and also in the over-the-counter market in the U.S. under the symbol TORXF. This geographic diversification can act as a hedge against region-specific economic or political instability.
