Gold Stocks That Could Deserve A Spot On Your Portfolio In Q4 2020
Gold stocks have had an interesting year in the stock market so far. These stocks, like the rest of the stock market, were not spared from the economic implications that came with the COVID-19 pandemic. Last week, the S&P 500 index dropped by 5.64%. Besides uncertainty surrounding the election, the market weakness may also be due to recent speculations surrounding leading COVID-19 vaccine developer Pfizer (PFE Stock Report). Despite claiming it would have a functional and safe vaccine by the end of October, the company has gone silent. Some investors likely see this as a red flag and are looking for conventional ‘safe’ stocks to fall back on. In light of this, would gold stocks be considered the unexpected underdog of 2020? Considered by some as a stock market safety net, investors have been looking out for top gold stocks to watch.
With a vaccine delay and the presidential election coming to an end, the stock market is highly unpredictable this week. Seasoned investors are aware that even growth drivers such as healthcare stocks and tech stocks may not be safe. Europe’s largest tech stock SAP SE (SAP Stock Report) is a good example of this. The company saw a 27% drop in share price last week. With such a volatile month ahead, gold stocks are likely to receive more attention. With that said, let’s look at these top gold stocks to watch.
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Gold Stocks To Watch For Your Portfolio In Q4 2020: Newmont Corporation
The first entry on this list is Newmont Corporation (NEM Stock Report). The company is based in Colorado and was founded in 1921. It is known to produce silver, zinc, copper, lead, and most importantly, gold. Newmont is one of the top gold stocks globally in terms of mining and overall production. It operates in nine countries across four continents, including the U.S. With nearly 100 million ounces of gold, the company has the largest reserve in the world.
Newmont has seen their best quarter to date in Q3 2020. A 30% increase in its realized gold price is the most noticeable contributor to this success. The gold mining company reports record level earnings of $1.7 billion. Furthermore, its adjusted net income skyrocketed to $697 million with earnings per share of $0.86. This would explain the strong Q3 financials shown. The company is likely to see the fruits of its two recent key agreements. First, its acquisition of gold producer Goldcorp in April 2019 had bolstered production capacity. Next, Newmont also partnered with Barrick Gold (GOLD Stock Report) to build the world’s largest gold producing complex. The company has obviously leveraged on these two major moves. Will it continue to expand aggressively moving forward?
In its Q3 earnings presentation, the company announced a 60% increase in quarterly dividends up to $0.40 a share. With about $1.3 billion in free cash flow, this is not surprising. With such ample free cash flow, investors have been paying attention to Newmont. The company has one of the highest dividend yields in the industry, which stands at about 2.6%. With all this in consideration, the company is positioned to reap further gains. This is why NEM stocks have earned a spot on this list.
Gold Stocks To Watch For Your Portfolio In Q4 2020: Kirkland Lake Gold Ltd
Next on this list is gold producer Kirkland Lake Gold Ltd (KL Stock Report). It operates in Canada and Australia. The company produced nearly a million ounces of gold in 2019 and aims to increase that number in 2020. Despite being smaller in scale operation, it has been making big moves in the gold industry. Kirkland has been making a series of acquisitions over the last few years. The company is currently operating three major mines in Macassa, Detour Lake, and Fosterville. The Detour Lake mine alone contains an estimated 14.8 million ounces of gold. This reserve has a predicted ‘life’ of 22 years which provides a solid source of free cash flow for Kirkland.
The company reported its Q3 gold production results in mid-October. Kirkland has seen a 44% increase in gold production year-to-date. There was also mention of a 50% increase in quarterly dividends starting Q4 2020. This could be why investors are watching its share price so fervently. Additionally, in terms of financials, the company is currently at zero debt. This is what sets it apart from its competitors. Kirkland’s share price has recovered tremendously from the March stock market crash showing a 100% increase. It is no doubt that the rising price of gold has also contributed to the company’s success. It sold over 330 thousand ounces of gold at the average price of $1907 per ounce in the last quarter. The numbers are impressive as Kirkland sold 29% more gold at an additional $425 per ounce.
With a robust portfolio of flagship mines and explosive dividends, it is no surprise Kirkland has caught the eye of some investors. Should KL stocks have a spot on your watchlist?
Gold Stocks To Watch For Your Portfolio In Q4 2020: Sibanye-Stillwater Ltd
The final spot on this list goes to Sibanye-Stillwater (SBSW Stock Report). Sibanye is one of the largest gold producers based in South Africa (SA). The company boasts a diverse portfolio of platinum group metal (PGM), gold and copper operations in SA and the U.S. It is also the world’s largest primary producer of platinum and rhodium. As a gold producer, the company currently ranks third in the world on a gold-equivalent basis.
Sibanye reported a record quarterly earnings of $922 million in Q3 2020 and has seen a 54% increase in share price over the last six months. The company also managed to reduce its net debt by an additional 40%. This is undoubtedly thanks to the price of gold rising to record highs in 2020. Other key highlights from its Q3 report mentions that SA operations have recovered from post-lockdown restrictions ahead of schedule.
In recent news, CEO Neal Froneman stated that the company was looking to further diversify its range of operations. Sibanye will be looking to venture into the battery metals industry. In October, Froneman revealed that the company is currently looking into acquisitions and would make moves in the next six to nine months. The company has undoubtedly made the most of its acquisitions up till now. A strategy it often employs is acquiring troubled mines just before commodity prices recover. Evidently, this has worked for Sibanye in the past. It acquired key rhodium mines Stillwater and Aquarius Platinum in time to reap the benefits of rising rhodium prices this year. Is SBSW stock on your watchlist this week?