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After years of underperformance, gold has finally surged and is reasserting its role as a stable metal.
The S&P/TSX Global Gold Index has outperformed the TSX Index in 3 of the last 4 years. This trend has been driven by the global pandemic followed by large-scale inflation. Gold and gold stocks are often seen as a hedge against uncertainty and high inflation.
Gold is a significant component of many Canadian stocks on the TSX, making their success vital for the Index. Agnico Eagle Mines is a Canadian-based gold metal & mining company operating in multiple locations worldwide. Founded in 1957, the company has established a reputation for its responsible mining practices, environmental stewardship, and commitment to the safety and well-being of its employees.
Agnico Eagle's mining operations are primarily located in Canada, Mexico, and Finland. The company has a diverse portfolio of mines, with each site contributing to its overall gold production. Key mines in Canada include LaRonde, Meadowbank, and Meliadine. In Mexico, it operates the Pinos Altos and Creston Mascota mines. In Finland, Agnico Eagle has a 50% interest in the Kittilä mine, one of Europe's largest gold producers.
In 2021, Agnico Eagle Mines (TSX:AEM) announced a merger with Kirkland Lake Gold, another Canadian-based gold mining company. The merger created one of the largest gold mining companies in the world, with a market cap of over $27 billion at that time. The combined company operates eight mines across Canada, the United States, and Australia, and is expected to produce over 2.4 million ounces of gold annually. This merger has reinforced its status as one of the top gold stocks in Canada. The company is projected to post earnings of $3.14 per share in Fiscal 2023, showing single-digit growth from 2022. While it is not the cheapest option, it remains a strong player with robust cash flows, which justifies its premium valuation.
Another notable player is Barrick Gold (TSX:ABX), one of the world's largest gold producers. Barrick has made significant progress in reducing its debt. In 2015, the company had nearly $17 billion in debt, but by 2023, this had been reduced to $6.3 billion in long-term debt. This has led to a notable improvement in the company's debt-to-equity ratio, from nearly 1.3 in 2015 to just 0.20 in 2024.
An interesting aspect of Barrick is its exposure to copper. Given the current copper bull cycle, Barrick is well-positioned to benefit. Barrick has also recommitted to returning cash to shareholders, achieving Canadian Dividend Aristocrat status with five consecutive years of dividend growth. The company announced plans to return additional money to shareholders via a return of capital distribution.
Barrick is expected to see double-digit earnings growth in 2024 relative to last year and is projected to continue growing those earnings at a double-digit pace through 2024.
Despite some setbacks, B2Gold (TSX:BTO) remains a noteworthy gold miner. Over the last few years, B2Gold has faced operational issues that have impacted its production. In 2019, the company's Masbate mine in the Philippines was hit by a typhoon, causing significant damage to its facilities and temporarily halting production.
