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Gold, as a safe-haven asset, has often been a refuge for investors as they hedge against government policies and overall volatility in the market.
The S&P/TSX Global Gold Index jumped about 17 per cent in quarter-to-date (QTD) and by over 13 per cent in the last 30 days. The S&P/TSX Composite Index, on the other hand, rose only 4.4 per cent QTD and about 2.2 per cent in the last one month.
This indicates that the returns in the stocks of gold companies outperformed those in the overall market in the given time periods.
The sudden surge in the gold stocks’ index can be attributed to the dramatic crash in the cryptocurrency market last week as Tesla boss Elon Musk, through a series of tweets, announced his plans to remove Bitcoin as a mode of payment.
Adding to the crypto market’s woes, the Chinese government’s ban on cryptocurrency’s usage as a payment method also fueled the boost.
As investors rush to invest in gold, let’s analyze three TSX-listed stocks that may benefit from this shift.
Newmont Corp (TSX:NGT)
One of the largest gold producers in the world, Newmont Corp saw its stocks outperform most of its peers to gain about five per cent in the last 30 days.
Presently trending high among other basic materials companies on the TSX, Newmont scrips closed at a price of C$ 88.31 on Tuesday.
Apart from gold, the mining company’s portfolio comprises several other metals including copper, lead, silver, etc. It reported robust earnings in the first quarter of 2021, with its net revenue from operations rising 11 per cent year-on-year (YoY) to C$ 2,872 million on the back of higher average realized prices on metals.
Meanwhile, its net income declined by C$ 299 million to about C$ 538 million in the latest quarter due to the sale of some investments, higher income tax payouts and lower sales volumes.
Newmont Corporation’s one-year performance, moving average exponential and volume of shares. (Source: EODHD/Others)
Franco-Nevada Corporation (TSX:FNV)
Another key gold stock listed on the TSX, Franco-Nevada clocked gains of about four per cent in the last 30 days and of nearly nine per cent in the last six months.
The Toronto-based company has a market capitalization of over C$ 34 billion, and a price-to-earnings ratio of 45.1, as per TMX. The scrip closed at C$ 181.1 on Tuesday.
In the first quarter of 2021, Franco-Nevada earned a 274 per cent higher net income on a YoY basis. Its net revenue from operations grew 28 per cent YoY in the latest quarter, with over 90 per cent of the sales sourced from North and South America.
Franco-Nevada Corporation’s one-year performance, moving average exponential and volume of shares. (Source: EODHD/Others).
Kirkland Lake Gold Ltd (TSX: KL)
Stocks of Kirkland Lake Gold offered returns of about four per cent in the last 30 days, and that of about 14 per cent in the last three months.
Kirkland Lake’s one-year performance, moving average exponential and volume of shares. (Source: EODHD/Others).
The Canada-based gold mining company has a market capitalization of over C$ 14 billion, and a price-to-earnings ratio of 15.4, as per TMX.
In its 2021 first quarter earnings report, announced earlier in May, Kirkland Lake’s net income stood at C$ 161,2 million while its revenue was C$ 551.8 million.
The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.
