With precious metals performing very well as of late, many investors are looking for ways to add gold to their portfolios. Thanks to concerns about the global economy and the fact that central banks are injecting tons of capital into financial markets, gold is approaching record high prices and attracting a lot of positive attention. We know that gold and precious metals are seen as a store of value when inflation is rising or when there are question marks related to the monetary supply, which is why looking into stocks that offer exposure to them could be a great call at this time.
Most investors look at Gold ETFs as a way to add precious metal to their portfolios. However, another attractive option is to buy mining stocks, which will also benefit greatly from rising prices in precious metals. SSR Mining Inc (NASDAQ: SSRM) is a mining stock that could be a nice option for several reasons. Let’s take a deeper look at why this stock might be a smart way to ride the gold rush.
Why Mining Stocks?
You might be wondering why investors would want to own mining stocks versus buying gold ETFs. If you buy a mining stock like SSR Mining, any increase in the price of gold directly benefits the bottom line for the company since it can produce gold at lower than the current market price. With the U.S. dollar losing ground against other international currencies, the price of gold has risen over the $1,800 dollar per ounce level for the first time since the year 2011. Most analysts are calling for the price to continue rising, which means gold mining stocks are set to have their profits rise if the trend continues.
Another reason why mining stocks can be a good investment has to do with the fact that they are actual companies with management teams trying to generate profits for shareholders. Buying a gold ETF like GLD (NYSEARCA: GLD) is usually done so to hedge against inflation and provide an alternative to cash. The problem is that those ETFs simply track the price of gold and aren’t producing anything, which means you aren’t investing in an actual company that can grow and generates profits.
Recent Merger is Good News
Another reason why SSR Mining is an interesting investment at this time is the fact that the company recently completed an all-stock merger with Alacer Gold Corp. The result is a new company that is worth $4 billion dollars and can produce roughly 780,000 ounces of gold each year. The merger means that this mining business will be operating in Canada, the U.S., Turkey, and Argentina, which tells us that the company has a diverse mining portfolio. With mergers like this, precious metal miners like SSR Mining can cut down their expenses and mitigate the risk that company earnings are tied to the output of a single mine.
Perhaps the biggest benefit of this recent merger is the fact that SSR Mining will be creating $450 million per year in free cash flow. Mining companies can be risky endeavors due to their high debt loads, but the fact that this company is generating steady cash flows should help to ease that concern. If this company eventually implements share buybacks or dividend payouts, which is common for companies with a lot of cash on hand, the stock could be even more valuable.
Strong Growth Prospects
Most investors don’t think of massive growth potential when it comes to mining companies. However, with the rising prices in gold and the recent merger, SSR Mining has a strong chance of experiencing continued growth going forward. Keep in mind that this company also specializes in mining silver, which is another precious metal that has been looking good lately. From an earnings standpoint, SSR Mining is expected to grow its EPSby 79.8% this year. That type of growth makes this stock absolutely worth a look.
The fact that so many analysts are increasing their 12-month price target for gold should tell you all that you need to know about the potential for this stock going forward. Take a look at SSR Mining if you are interested in a stock that offers exposure to precious metals like gold and silver, a solid balance sheet, and offers legitimate growth potential.
10 Rock-Solid Dividend Paying Stocks to Own
Historically low interest rates have made it difficult over the last decade for income-oriented investors that want to generate safe cash flow for their retirements.
Dividend-paying stocks have become more appealing to income investors because of their competitive yields, the favorite tax treatment that dividends receive and their ability to grow their payouts over time. While fixed interest rates from bond investments will lose purchasing power to inflation over time, the purchasing power of income from dividend growth stocks is more protected because companies tend raise their dividend payments every year.
In this slideshow, we look at ten of the best high-dividend stocks that offer strong yields (above 3.5%), have consistent cashflow and a strong track record of dividend growth. The companies in this slideshow have all raised their dividend every year for the last ten years.
These companies also have low payout ratios (below 75%), meaning that they will have the ability to continue to pay their dividend if their earnings have a temporary dip.
Stock prices will always fluctuate, but the dividends paid by these rock-solid dividend payers should remain secure with moderate earnings growth.
View the "10 Rock-Solid Dividend Paying Stocks to Own".