As the market is recovering from the pandemic’s setbacks, many stocks have scored fresh all-time highs over the year. Some metrics suggest that presently, stock markets are trading at historically high valuations.
However, Canadian gold stocks are considered to be undervalued, perhaps allowing investors an opportunity to hedge their investment portfolios, especially at a time when inflation is picking up steam.
Some experts believe that adding gold stocks to an investment portfolio, at such cheap prices, will help investors to enhance their exposure and diversify, thus possibly lowering the risk attached to their portfolios in the long term.
Also read: 3 Canadian midcap stocks to buy this fall
Let us explore some of the Canadian gold stocks listed on the Toronto Stock Exchange (TSX) that may fetch profit and diversify portfolio risk.
1. Barrick Gold Corporation (TSX:ABX)
One of the largest yellow metal producers in the world, Barrick Gold Corporation saw its stock closing down by 0.211 per cent at C$ 23.61 apiece, on Monday, October 18.
At this closing price, the stock was more than 38 per cent below its 52-week high of C$ 38.2725 as of November 6, 2020. However, its stock is trading up by almost six per cent from its 52-week low of C$ 22.30 reached on September 28.
The ABX stock slipped by about 34 per cent in the past year and tumbled by roughly 17 per cent on a year-to-date (YTD) basis. Its stock slumped by more than nine per cent in the past three months. However, it rose nearly by one per cent in the last month and increased by more than three per cent on a month-to-date (MTD) basis.
The C$ 41.9 billion market cap firm held a price-to-earnings (P/E) ratio of 13.30, a price-to-book (P/B) ratio of 1.433, a return on equity (ROE) of 11.01 per cent, a return on asset (ROA) of 5.49 per cent and a dividend yield of 1.917 per cent at the time of writing.
Barrick Gold is ranked among the top 25 actively trading stocks on the TSX with a 10-day average trading volume of 3.4 million on October 19.
2. NovaGold Resources Inc (TSX:NG)
The gold explorer NovaGold Resources Inc noted its stock priced at C$ 9.17 apiece, down by 2.96 per cent, at market close on October 18.
At this price, the stock traded roughly 12 per cent above its 52-week low of C$ 8.21 on September 28. The stock is almost 39 per cent below its 52-week high of C$ 14.98 scored on November 6, 2020.
NG experienced a fall of almost 37 per cent in the past year and the stock descended nearly 23 per cent in the last six months. However, it climbed roughly six per cent in the last one month and marked an MTD growth of more than five per cent.
The Vancouver-based NovaGold had a P/B ratio of 28.656 and a debt-to-equity (D/E) ratio of 1.32, at the time of writing.
3. Victoria Gold Corp (TSX:VGCX)
The Whitehorse-based Victoria Gold Corp witnessed its scrip wrapping up trade at C$ 18.42 apiece, up by 1.32 per cent on October 18. At this closing price, it marked a fall of more than 18 per cent from its 52-week high of C$ 22.54 on June 14.
The stock experienced a YTD growth of approximately 51 per cent and surged by roughly 12 per cent in the past year. It soared by more than 42 per cent in the last nine months and climbed about 19 per cent in the past month.
Victoria held a P/E ratio of 10.40, a P/B ratio of 2.851, a price-to-cash flow (P/CF) ratio of 9.2 and a D/E ratio of 0.76, at the time of writing.
4. Kirkland Lake Gold Ltd (TSX:KL)
The stock of the pure-play gold production company Kirkland Lake Gold Ltd slipped by 1.072 per cent and was priced at C$ 56.30 per share at market close on October 18. At this closing price, its stock was roughly 41 per cent above its 52-week low of C$ 40.07 on March 30.
Kirkland’s stock plunged by nearly 15 per cent in the past year, however, it jumped about seven per cent on a YTD basis. It surged by almost 11 per cent in the past three months and expanded by more than seven per cent in the last month.
With C$ 14.9 billion of market capitalization, Kirkland Gold posted a P/E ratio of 14.80, a P/B ratio of 2.269, an ROE of 16.72 per cent, an ROA of 12.34 per cent and a dividend yield of 1.689 per cent on October 18.
5. Equinox Gold Corp (TSX:EQX)
The Canadian gold miner Equinox Gold Corp saw its stock closing at C$ C$ 9.62 apiece, down by 1.535 per cent, on October 18. The stock touched its 52-week low of C$ 7.53 on August 18, 27.76 per cent below the current closing price.
The stock declined by more than 43 per cent in the past year and slid by nearly 27 per cent on a YTD basis. However, it noted a surge of about 22 per cent in the last three months and climbed nearly six per cent in the last one month.
The C$ 2 billion market cap gold firm had a P/E ratio of 4.60, a P/B ratio of 0.994, a D/E ratio of 0.23, an ROE of 24.74 per cent and an ROA of 14.09 per cent on Tuesday, October 19.
Investors generally prefer to invest in other types of stocks as they offer higher yields than gold stocks. However, if one wishes to play safe in the stock market and earn a good amount of profit in the long run then, gold is a suitable investment option.
Many market experts believe that having gold stocks in the portfolio adds to the financial soundness of investors and that it could help in balancing the financial health against the market risk.