What are the best Canadian gold stocks?

Gold prices had surged to record levels in 2020 as more investors rushed to park their funds in the safe asset amid the pandemic. This year, however, gold has come under some pressure as the major economies turned a corner to recover from their pandemic lows.

The S&P/TSX Global Gold Index has plummeted over six per cent year-to-date (YTD), in contrast to the S&P/TSX Composite Index’s rise of nearly 16 per cent this year.

However, even as the economic recovery impacts the prices of the yellow metal, its significance as refuge in times of economic slump remains. Considering that the pandemic is still around, its demand could rise again among investors in case the need of a safe haven asset rises again.

With that in mind, let’s look at some TSX-listed gold stocks likely to fetch returns going forward.

Kirkland Lake Gold Ltd. (TSX:KL)

Kirkland Lake Gold is one of the largest gold miners based out of Canada. It undertakes exploration and development operations in Ontario and Australia. The C$ 13-billion market cap player also owns some mines and material mineral projects.

Apart from its returns during the bullion boom in 2020, Kirkland stock has grown about 15 per cent in quarter-to-date (QTD), as against the TSE 300 Composite Index, which registered a 7.68 per cent jump in the same period.

On June 23, 2021, the stock closed at C$ 48.72, about 36.3 per cent below its 52-week high of C$ 76.43 (August 5, 2020).

The gold producer pays a quarterly dividend of US$ 0.188, which posts a 2.236 per cent dividend yield at present. The dividend has grown at a rate 39.82 per cent in the last three years.

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Barrick Gold Corporation (TSX:ABX)

Barrick Gold is one of the world’s largest gold producers, with projects in North and South America, Australia and Africa. It had about 68 million ounces and 13 billion pounds of gold and copper reserves at the end of 2020.

The C$ 46-billion market cap company posted a 30-day average trading volume of 4.5 million shares on the TMX.

Barrick Gold sold 1.09 million ounces of gold in the first quarter ending March 31, 2021, as against its production of 1.10 million ounces in Q1 2020. Copper sales also rose to touch 113 million pounds in the latest quarter.

The gold producer said in its latest earnings report that it was on track to achieve its 2021 guidance targets.

Barrick Gold distributes a US$ 0.09 quarterly dividend, which has a 1.717 per cent yield, as her TMX. Its dividend grew 28.25 per cent in the last three years.

Kinross Gold Corporation (TSX:K)

A senior gold producer with about 30 million ounces of gold reserves, Kinross Gold Corporation is a greenfield and brownfield exploration company. It operates in Americas, West Africa, and Russia, and has traditionally taken the acquisition route to expand its geographical operations.

Kinross saw an average of about 3.8 million shares exchange hands in the last 30 trading sessions.

The stock closed at C$ 7.84 on June 24. It holds a price-to-book (P/B) ratio of 1.191, with about C$ 1.40 earnings per share (EPS).

The gold stock’s price-to-earnings (P/E) ratio is about 5.80, while it offers a 21.58 per cent return on equity (ROE), as per TMX.

Kinross Gold has set a target to produce 2.4 million ounces of gold in 2021, at a capital expenditure of US$ 900 million. It had cash and cash equivalents of US$ 1.056 billion as of March 31, 2021.

Agnico Eagle Mines Limited (TSX:AEM)

Another constituent of the S&P/TSX Global Gold index, Agnico Mines is a C$ 18.7-billion market capitalization company. Its operations are concentrated in Canada, Mexico and Finland. It produced about 1.7 million ounces of gold in 2020, with its focus on pushing gold production in jurisdictions with lower risk.

Agnico pays a quarterly dividend of US$ 0.35 a share, with a current dividend yield of 2.236 per cent. It was last distributed on June 15, 2021.

Agnico Eagle Mines’ P/E ratio is about 22.40, while it offers a 11.80 per cent ROE. The stock’s P/B ratio currently hovers around 2.6, and its debt-to-equity (D/E) ratio is around 0.30, as per TMX.

Agnico stock rose about 5.88 per cent in the last three months, as against the TSE 300 Composite Index that was down 4.52 per cent in the same period.

Agnico Eagle Mines earned about US$ 136.1 million as net income in the first quarter of 2021. Its cash flow from operations rose substantially year-over-year (YoY) to touch US$ 356.4 million in the latest quarter, as against US$ 163.4 million in Q1 2020.

Franco-Nevada Corporation (TSX:FNV)

Franco-Nevada Corporation is one of the top metal stocks listed on TSX, with a C$ 34.4-billion market capitalization. The company, with its diversified portfolio, earns revenues through its precious-metals-focused royalty and investment operations.  Its investments are concentrated in Canada, US, and Australia.

Its short-term performance hinges on the prices of commodities, while the exploration stage and development capital determine its long-term performance.

Its adjusted operating margin was at 85 per cent in the first quarter of 2021. The company generated about US$ 224.3 million operating cash flows in Q1 2021.

About 85 per cent of its revenues, amounting to US$ 240.5 million, was earned from gold and gold equivalents. Its operations in the Americas, including Canada, reportedly contributed over 90 per cent to the total revenues in Q1 2021.

The above constitutes a preliminary view and any interest in stocks should be evaluated further from investment point of view.