After watching gold rise 13 percent in 2017 to put on its best annual performance since 2010, market watchers are optimistic about the yellow metal.
Many gold stocks also performed well last year, and now that 2018 has begun experts are beginning to release their picks for the year. Analysts at Raymond James recently provided their top 16 stock picks across 11 different industrial sectors, and three gold companies made the list.
Read on to learn which three gold stocks the analysts are looking at and why they have potential. Raymond James notes that while the companies “represent a current snapshot of our analysts’ best ideas,” investors should do their own due diligence.
1. Agnico Eagle Mines (TSX:AEM,NYSE:AEM)
Current price: C$58.04; 2017 gain: 2.82 percent
Agnico Eagle Mines has eight mines across Canada, Mexico and Finland, with exploration and development projects in those regions as well as the US and Sweden. It has declared a cash dividend every year since 1983, and as of October its 2017 guidance stood at 1,680,000 ounces of gold.
Raymond James finds the company appealing because it has exceeded its annual production guidance for the past six years and has a “low jurisdictional risk operating profile.” The firm also states that Agnico “remains one of the few senior gold producers with a healthy growth profile over the next 3 years that can be funded internally from operating cash flows and a strong balance sheet.”
2. B2Gold (TSX:BTO,NYSEAMERICAN:BTG)
Current price: C$3.88; 2017 gain: 21.63 percent
B2Gold has five operating mines and numerous exploration and development projects in various countries, including Nicaragua, the Philippines, Namibia, Mali, Burkina Faso, Colombia and Finland. For 2017, the company is forecasting gold production of 580,000 to 625,000 ounces; it sees that amount increasing by 58 percent in 2018 as its Fekola mine completes its first full year of commercial production.
According to Raymond James, B2Gold is an “intermediate gold producer on the cusp of delivering significant production growth and lower operating costs.” The firm views Fekola as “transformational” for the company, and believes that its share price will benefit as the operation ramps up.
Analysts at BMO Capital Markets also
recently identified B2Gold as a top pick for 2018.
3. Franco-Nevada (TSX:FNV,NYSE:FNV)
Current price: C$100.46; 2017 gain: 25.14 percent
Franco-Nevada bills itself as the world’s leading gold royalty and streaming company, with the largest and most diversified set of assets. As a royalty company, it does not operate mines, develop projects or conduct exploration, but instead focuses on growing its portfolio of streams and royalties.
For Raymond James, Franco-Nevada’s appeal stems from the fact that it has “a diversified high-quality asset base in favourable jurisdictions.” Additionally, it sees free cashflow accelerating after the company completes payments on the Cobre Panama project and Cobre Panama starts producing; Franco-Nevada also “has a strong balance sheet to finance potential future deals and support its dividend.”
Adrian Day of Adrian Day Asset Management has also recommended Franco-Nevada to investors. In an interview this past November, he commented, “if you only want to buy one gold stock — just buy it and forget about it — I think Franco Nevada is the one to buy.”
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Securities Disclosure: I, Charlotte McLeod, hold no direct investment interest in any company mentioned in this article.
