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7 Precious Metals Stocks That Will Offset the Effects of Inflation

Posted on Friday, November 19th, 2021 by MarketBeat Staff
7 Precious Metals Stocks That Will Offset the Effects of InflationThere’s no getting around it. Inflation is going to be an unwelcome guest at our holiday gatherings this year. Estimates say this will be the most expensive Thanksgiving dinner in years. The Consumer Price Index (CPI) jumped 6.2% in October. That was the biggest surge in 30 years.

But the latest inflation data only confirmed what investors already knew. At least the ones that put gas in their cars or buy groceries. And yet, Washington continues to advocate even more spending. The latest “skinny” infrastructure bill will still pump over $1 trillion (that’s trillion with a “T”) into the economy. Even economists who would usually be favorably disposed to the current administration acknowledge that this will only cause inflation to increase.

That means it’s a good time to consider investing in precious metals which are considered to be safe-haven assets and a hedge against inflation. But that’s not the only reason to consider precious metals. You can also get some nice growth. Gold, for example, is up more than 300% in the past 15 years. And we would certainly advocate that you consider owning a bit of physical metals if you can.

However, buying precious metals stocks gives you exposure to many mining companies. As the spot price for the metals rises, it becomes more profitable for these companies to run their mining operations.

#1 - Agnico Eagle Mines (NYSE:AEM)

Agnico Eagle Mines logo

One attribute to look for in any equity, but in precious metals stocks in particular, is a high floor. That’s a solid reason to look at Agnico Eagle Mines (NYSE:AEM). The company trades at a premium compared to other mining stocks. However, the company is widely seen as carrying a high upside with minimal risk to the downside.

But sound management is not the only one to consider the stock. Another catalyst for AEM stock is its pending mergerwith Kirkland Lake Gold (NYSE:KL). When the merger is complete, Agnico will be the third largest miner behind only Newmont Corporation and Barrick Gold.

This Canadian company has been mining gold and other precious metals since 1957. Analysts give the stock a consensus price target of $91.07 which gives the stock an upside of nearly 60% from its present price. The company has declared a dividend every year since 1983. The company’s annual dividend (paid quarterly) as of this writing is $1.40 which comes out to a yield of $2.46%.

About Agnico Eagle Mines

Agnico Eagle Mines Limited engages in the exploration, development, and production of mineral properties in Canada, Sweden, and Finland. The company operates through Northern Business and Southern Business segments. It primarily produces and sells gold deposit, as well as explores for silver, zinc, and copper deposits.Read More 
Current Price
$50.68
Consensus Rating
Buy
Ratings Breakdown
5 Buy Ratings, 4 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$90.93 (79.4% Upside)




#2 - Barrick Gold (NYSE:GOLD)

Barrick Gold logo

If the rally in gold is really underway, then Barrick Gold (NYSE:GOLD) merits consideration. The Canadian multinational miner is engaged in the production and sales of gold and copper. It has active gold and copper mining-related activities in the United States and Canada.

GOLD stock is down for the year as the initial optimism about gold in the early part of the year evaporated. However, despite a series of analysts lowering their price targets for GOLD stock, it still presents investors with a potential 56% gain from its current level.

In a similar dynamic that occurs with oil stocks, gold mining stocks become more attractive as the spot price of gold climbs. You can see that GOLD stock has had a correlation with the spot price. And both have been moving higher in the last month.

Barrick Gold reported earnings in mid-November and reported free cash flow of $481 million in addition to being able to save shareholders approximately $1.4 billion. And the company sustained its quarterly dividend at nine cents per share.

About Barrick Gold

Barrick Gold Corporation is a sector-leading gold and copper producer.  Its shares trade on the New York Stock Exchange under the symbol GOLD and on the Toronto Stock Exchange under the symbol ABX.   In January 2019 Barrick merged with Randgold Resources and in July that year it combined its gold mines in Nevada, USA, with those of Newmont Corporation in a joint venture, Nevada Gold Mines, which is majority-owned and operated by Barrick.Read More 
Current Price
$19.15
Consensus Rating
Buy
Ratings Breakdown
9 Buy Ratings, 3 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$32.52 (69.8% Upside)




#3 - Newmont Corporation (NYSE:NEM)

Newmont logo

Newmont Corporation (NYSE:NEM) is the largest miner in the world and it has a premium stock price to support that. But are other gold stocks more worthy of your attention? You might think so, particularly after Newmont missed analysts’ expectations for earnings and revenue in its most recent quarter. But if you’re a risk-averse investor than the quality of NEM stock should come shining through.

In its most recent earnings report, Newmont reported 1.45 million ounces of gold production. Although that would put the company on pace to come in below 2020 production, the company still presented a bullish outlook that said it would extract 6.0 million ounces for the year.

However, like Barrick Gold, even with lowered expectations, NEM stock is still forecast to deliver strong 12-month price growth of over 23%. And that doesn’t include the sweetener investors get from the company’s dividend which currently nets out to $2.20 annually at an attractive yield of 3.83%.

About Newmont

Newmont Corp. is a gold producer, which engages in the production of gold. It operates through the following geographical segments: North America, South America, Nevada, Australia, and Africa. The North America segment consists primarily of carlin, phoenix, twin creeks and long canyon in the state of Nevada and Cripple Creek and Victor in the state of Colorado, in the United States.Read More 
Current Price
$55.40
Consensus Rating
Buy
Ratings Breakdown
7 Buy Ratings, 6 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$70.84 (27.9% Upside)




#4 - First Majestic (NYSE:AG)

First Majestic Silver logo

The first three stocks on this list have been gold producers. And while there’s a case to be made for the yellow metal today, there may be an even stronger case for silver. Which brings us to First Majestic (NYSE:AG). After spiking at the beginning of the year, AG stock has been a laggard. But simple supply/demand dynamics make a strong case for a move higher.

If you look at the recent infrastructure bill that is likely to pass through Congress, you’ll see an emphasis on electric vehicles and solar technology. These are two sectors that will continue to have strong demand for silver. In fact, according to data provided by the company, 57% of silver consumption comes from industrial applications.

First Majestic is also the only mining company that makes their own production available in the form of silver bullion. The company’s Bullion Store is open 24/7 for online ordering.  Analysts give AG stock a consensus price target of $21 which would be a 54.87% gain from its current level.

About First Majestic Silver

First Majestic Silver Corp. engages in the production, development, exploration and acquisition of mineral properties. It owns and operates producing mines in México including La Encantada Silver Mine; La Parrilla Silver Mine; San Martin Silver Mine; La Guitarra Silver Mine; Del Toro Silver Mine; Santa Elena Silver & Gold Mine; and San Dimas Silver & Gold Mine.Read More 
Current Price
$12.27
Consensus Rating
Buy
Ratings Breakdown
2 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$21.00 (71.1% Upside)




#5 - Freeport-McMoRan (NYSE:FCX)

Freeport-McMoRan logo

Up to this point, the stocks we’ve looked at are down for the year. That’s not the case with Freeport-McMoRan (NYSE:FCX). The stock is up 42% this year. This is largely due to the rally in copper prices which tends to move higher in times of economic growth.

And the company’s assets include the Grasberg minerals district in Indonesia. This area has one of the world’s largest copper and gold deposits. With the demand for copper likely to increase with the U.S. infrastructure plan including the need for copper in electric vehicles, the company is likely to have a catalyst well into 2022.

Freeport-McMoRan last reported earnings in October and delivered a split decision with an earnings beat, but a slight revenue miss. The consensus price target of analysts suggests that the rally could be coming to an end. However, recent price targets are much higher than the consensus estimate.

About Freeport-McMoRan

Freeport-McMoRan, Inc engages in the mining of copper, gold and molybdenum. It operates through the following segments: North America Copper Mines, South America Mining; Indonesia Mining, Molybdenum Mines, Rod and Refining, Atlantic Copper Smelting and Refining and Corporate, Other and Eliminations. The North America Copper Mines segment operates open-pit copper mines in Morenci, Bagdad, Safford, Sierrita and Miami in Arizona and Chino and Tyrone in New Mexico.Read More 
Current Price
$37.98
Consensus Rating
Buy
Ratings Breakdown
11 Buy Ratings, 4 Hold Ratings, 2 Sell Ratings.
Consensus Price Target
$40.67 (7.1% Upside)




#6 - Platinum Group Metals (NYSEAMERICAN:PLG)

Platinum Group Metals logo

Under the heading of all that glitters is not necessarily gold, investors should consider investing in Platinum Group Metals (NYSEAMERICAN:PLG). This could classify for some as a penny stock, but it’s an intriguing play for investors interested in investing in platinum and palladium.

This past summer, the company received a new patent for technology that is designed to accelerate the development of “next generation” lithium-sulphur batteries. These batteries aren’t drawing as much attention as lithium-ion batteries, but they have the potential to increase the power-to-weight ratios.  To that end, the company is researching ways its proprietary technology may boost the performance of lithium-ion batteries.

After a strong 2020 in which the company benefited from increased demand for both metals, PLG stock has taken a beating in 2021. But in the last month, the stock has rallied 19%. With a beta of 1.99, this is a volatile and speculative stock. However, as a play on what is likely to be an extended rally in precious metals, it should be on your watch list. 

About Platinum Group Metals

Platinum Group Metals Ltd. operates as a mining company. It focuses on production of platinum and palladium. The firm deals with waterberg project located on the Northern Limb of the Bushveld Complex in South Africa. The company was founded by R. Michael Jones on January 10, 2000 and is headquartered in Vancouver, Canada.
Current Price
$2.20
Consensus Rating
N/A
Ratings Breakdown
0 Buy Ratings, 0 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
N/A




#7 - Hecla Mining (NYSE:HL)

Hecla Mining logo

Closing out our list of precious metals stocks is Hecla Mining (NYSE:HL). This company is a pure-play on silver mining. In fact, the company produces approximately one-third of all silver mined in the United States. One of the company’s primary assets is the Greens Creek mine in Alaska. This is one of the largest silver mines in the world and helps the company generate significant cash flow.

Hecla Mining draws a surprising amount of interest from the analyst community. The consensus of six analysts is for HL stock to climb 22.58% above its current price. It should encourage investors that even after a disappointing earnings report in November, HL stock has climbed 7%.

That is likely because the company forecasts that production at one of its other assets, the Lucky Friday mine will double between 2020 and 2023. And with the price of silver rallying since the end of September, this should boost the company’s top and bottom lines in subsequent quarters.

About Hecla Mining

Hecla Mining Co operates as a silver and gold production company. The firm produces lead, zinc and bulk concentrates for custom smelters and brokers; and develops unrefined precipitate and bullion bars for precious metals traders. It operates through the following business segments: The Greens Creek, The Lucky Friday, The Casa Berardi, The Nevada Operations, and The San Sebastian.Read More 
Current Price
$5.60
Consensus Rating
Buy
Ratings Breakdown
4 Buy Ratings, 2 Hold Ratings, 0 Sell Ratings.
Consensus Price Target
$7.51 (34.2% Upside)



 

There is a sentiment among many retail investors that precious metals are yesterday’s news. In their minds, the real hedge against inflation is cryptocurrency. They may be right. We’re inclined to believe both will be quite effective. Let’s just agree that a growing cryptocurrency market doesn’t change the value of precious metals. They are a proven store of value against inflation.

A “typical” precious metals portfolio will give investors exposure to gold, silver, platinum, and palladium. The latter two are used in many of the sectors that will drive the economy forward. And that’s what we’ve tried to provide in this presentation. And it’s often theorized that one or more precious metals is always in a bull market.

Investors who don’t want to invest in a single metal or any single company (like the ones in this presentation) may consider one of the many precious metals exchange-traded funds that focus on precious metals. If you choose this alternative, you may have to pick one or more funds as many funds are specific to a particular metal.

20 Stocks Wall Street Analysts Love the Most

Every trading day, between 500 and 800 new recommendations and research reports are issued by sell-side equities research analysts. There are between 300 and 500 brokerages and research houses that issue ratings, price targets and recommendations and more than 5,000 securities around the world that regularly receive coverage from research analysts.

MarketBeat has tracked more than 170,000 distinct analyst recommendations in the last 12 months alone. Given the volume of ratings changes that occur each day, it can be difficult to sift through the noise.

Analysts don't always get their "buy" ratings right, but it's worth taking a hard look when more than a dozen different analysts from different brokerages and research firm are giving "strong buy" and "buy" ratings to the same stock.

This slide show lists the 20 companies that have the highest average analyst recommendations from Wall Street's equities research analysts over the last 12 months.

View the "20 Stocks Wall Street Analysts Love the Most" Here.





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