- Spot gold touched all-time high price of US$ 2,073 per ounce in August 2020.
- The rally was driven by investors looking for safe assets amid extraordinary fiscal and monetary situations caused by the COVID-19 pandemic.
- Analysts expect gold’s bull run will continue in near future.
- We look at three trending gold stocks: Barrick Gold Corp (TSX: ABX), Kinross Gold Corp (TSX: K) & Kirkland Lake Gold Ltd (TSX: KL)
Gold stocks have been on a tear in the pandemic markets. Spot gold prices recorded an all-time high price of US$ 2,073 per ounce in August 2020. This was driven by investors looking for safe assets amid the extraordinary fiscal and monetary situations caused by the COVID-19 pandemic. Analysts expect gold’s bull run will continue in near future, especially with no immediate end in sight for the virus.
Canadian gold stocks bounce back in 2020 came after a long period of drought. The S&P/TSX Global Gold Index has yielded 43.97 per cent returns year-to-date, as compared to the broader Toronto Stock Exchange index that declined by 3.20 per cent in the same period. On the junior TSX Venture, early-stage gold mining and exploration companies have fuelled a rally, leading to the index doubling its value from March lows of 358.04 points to 730.31 points this month (on August 22).
As gold continues to create new histories in equity market, let us take a look at three trending gold stocks from the TSX:
Barrick Gold Corporation (TSX: ABX)
Riding on the gold’s bull rally, stocks of Barrick Gold Corporation have surged by 63 per cent this year. On quarterly and monthly scales, the C$ 68.6 billion-gold mining company posted 4.3 per cent and 4 per cent gains, respectively.
Barrick Gold announced quarterly dividends of USD 0.08 and yields a dividend return of 1.109 per cent. Its current price-earnings ratio is 12.00 while earnings per share (EPS) is C$ 3.30.
Berkshire Hathaway, the multinational conglomerate owned by American investor Warren Buffett, recently bought 21 million shares of Barrick Gold Corp for approximately US$ 564 million. The stake acquisition has further jacked up the company’s stock prices.
Barrick Gold’s revenue grew 48 per cent year-over-year (YoY) to US$ 3.06 billion in the second quarter of 2020. Adjusted net earnings per share stood at 23 cents in Q2, up 155 per cent YoY from the previous year quarter.
Barrick Gold’s Financial Statement
(Source: Barrick Gold Corp)
Its YoY net debt was also down by nearly 61 per cent to US$ 1.4 billion.
The company’s operations improved at Nevada Gold Mines in the US, Loulo-Gounkoto in Mali, and Kibali in Congo, helping the year-to-date gold production touch 2.4 million ounces in the second quarter of 2020.
Barrick Gold is among the biggest mining companies in the world and focuses on high-margin and long-life gold operations. Its strong balance sheet along with Berkshire Hathaway’s investment has made it an investors’ favourite in pandemic markets.
Kinross Gold Corporation (TSX: K)
Kinross Gold’s stock has yielded a whopping 91 per cent returns this year. The scrips have posted 6 per cent in a month and 15 per cent over three months. Its current market capitalization is C$ 14.3 billion and EPS is C$ 0.95.
In the second quarter of 2020, net earnings more than doubled YoY to US$ 195.7 million. Operating cash flow surged 30 per cent YoY to US$ 432.8 million in Q2 2020. Kinross Gold’s operating cash flow for Q2 2020 also increased significantly by 45 per cent YoY to US$ 416.9 million due to increase in margins.
At the end of second quarter, Kinross had cash and cash equivalents of US$ 1,527.1 million, up US$ 1,138.6 million quarter-over-quarter.
As per a pre-feasibility study, the company’s Lobo-Marte project in Chile added 6.4 million gold reserve ounces, leading to an approximately 25 per cent surge in Kinross’ 2019 year-end mineral reserve. The company is also in collaboration talks with Mauritania government for a 30-year exploitation license for Tasiast mine.
In short, Kinross Gold’s long-term growth prospects also look robust.
Kirkland Lake Gold Ltd (TSX: KL)
The C$ 19.4-billion gold company has paid out USD 0.125 quarterly dividends and has a dividend yield of 0.967 per cent. Its current P/E ratio is 17.50 and EPS is C$ 3.97.
Kirkland Lake’s stocks have surged 24 per cent year-to-date. The shares have yielded 29 per cent returns in a quarter and 13 per cent in a month.
The company’s revenue more than doubled, surging 107 per cent YoY to US$ 581 million in Q2 2020. The company ended the quarter with US$ 537.4 million cash in hand and zero debt.
Kirkland Lake Gold Financials
(Source: Kirkland Lake Gold)
The company has been acquiring several mines across the world, creating diverse and robust portfolio, which has proved to be an attractive proportion for investors.