Gold investment has always been a safe investment, especially in the times of global instability and political turmoil. Investors have made money on gold investments in the age of current financial crisis. I chose the five following gold companies for my research because they all benefiting from key drivers such as operating in proven site projects, strong assets for use in expansion, and attractive current market price levels. At their current market levels, these companies can be a safe investment.
Minera Andes (MNEAF.OB) engages in the mining property exploration, located in the republic of Argentina. Approximately 244,500 of mineral rights are held by the company, rendering them abundant power to develop and explore mineral targets constituting of gold, silver, and copper. The market capitalization of the company is $573 million. In 2011, Minera Andes in its San Jose mining property, produced silver and gold around 5.2 million ounces and 84,000 ounces respectively. The company's Los Azules copper deposit has shown prospect of significant uptrend. Currently, the stock is trading at around $3, within its 52-week range of $3.58 and $1.26. Citing the exploration properties of the company in the Deseado Massif region of Southern Argentina, and in the Santa Cruz Province of Argentina, where the company owns gold and silver mines of more than 50,000 hectares, Minera Andes looks attractive for investment at its current market level. In fact, at its current market price the company looks grossly undervalued. With price earnings of around $9, this stock can be purchased at its current market price, with a short to medium term perspective.
Newmont Mining (NEM) engages in production of gold, on a global platform. The company operates in different parts of the globe, where it owns significant properties in other to carry out its mining and exploration activities. Its operation encompasses the regions of United States, Canada, Australia, New Zealand and Mexico. The current market share of the company is around $59, trading within its 52-week range of $72.42 and $50.05. The company has market capitalization of around $29, with is price earnings shown to be around $13, whereas its earnings per share is around $4. The dividend yield of the company is around 2%, with the dividend rate per share averaging around 1.40. The company, headquartered in Denver, Colorado, is one of the largest gold producers on a global platform. The company also owns significant gold mines in the regions of Peru, Ghana, Indonesia, wherein Newmont Mining implements high standards of safety as well as healthy practices, in exploring gold production. Currently, the stock is trading at price earnings multiples of around 11. Moreover, the company does not indulge in gold hedging, which is why the company's stocks offer liquidity to its investors and traders. Moreover, any increase in gold prices, can enable the company to benefit from it to a larger extent, especially due to the fact that Newmont Mining Corporation does not practice gold hedging. I would recommend purchasing the company's stock at its current market price, with a medium to long term perspective.
Agnico Eagle Mines Limited (AEM) is currently trading at around $35, within its 5-week highs and lows of $73.09 and $31.42. With earnings per share of around $0.69, it has price earnings of around $59. The market capitalization of the company is around $6 billion. The company is headquartered in Toronto, Canada, and is engaged in gold production. With its exploration and mining activities carried out in Canada as well as regions of western United States. Exploring proven mineral sites, in order to develop opportunities involved in the production of gold, has been the basis of its activity upon which Agnico Eagle Mines Limited gets positioned. The future prospects of the company looks bright, due to the company's proven site projects of the Lapa and Goldex projects. Its LaRonde mine enables the company to maintain a healthy cash flow. The three year period cost and production guidance has been announced by the company for 2012 through 2014. With the gold stocks expected to surge in 2012, investing in Agnico Eagle Mines at its current market price, with a long term perspective will be a part of an optimal investment strategy.
Kinross Gold (KGC) engages in gold production in the regions of the U.S., Africa, Chile and Russia. The current market share of the company is around $11, trading within its 52-week range of $18.25 and $9.96. The company's dividend yield is around 1.40%. The company is a low risk investment for its investors, which can be seen from its beta being less than 1. With an earnings per share of around $0.57, and price earnings of around $13, the stock valuation looks good at its current levels. In 2011, the company slumped near to its 52-week lows, mainly due to its acquisition with Messrs Red Back Mining, wherein the company paid a high acquisition price. The acquisition of Bema has transformed the status of Kinross Gold in making it the sixth largest gold producer. The company projects a steady growth in cash flows, and sales, whereby any positive trend in the commodity market of gold, would garner an positive impact on the company. I would recommend buying this stock at its current market price, keeping a medium to long term perspective.
Yamana Gold (AUY) is gold exploration company having its presence in the regions of Brazil, Chile, Mexico and Argentina. Its current market price is around $16, trading within the 52-week range of $17.97 and $11.10. With earnings per share of around $0.84, and price earnings of around 20, the company has a market capitalization of approximately $12 billion. The surge in bullion prices has increased the company's profits in the last few quarters of 2011. Economic instability causing a major European crisis along with speculation pertaining to U.S. recovery has benefited the company. The beta of the stock is under 1, which implies low volatility of the stock, as compared with its peers. The company has relatively low debt, which coupled with a prospect of high business growth makes the stock a part of an good investment plan, at its current market price. However, in my opinion, this stock should be purchased from a long term investment perspective.
About the author:I'm mostly interested in income investing using dividends, preferred stocks and other debt instruments, and pair trading.
I fundamentally analyze every business from the top down.
In my personal life, I have a strong Jewish faith and enjoy playing Scrabble and entrepreneurship.