AEM: 3 Gold Mining Stocks To Hedge Against Inflation

Gold mining stocks have long been a go-to investment during periods of economic uncertainty, particularly as a hedge against inflation. When inflation rises, the value of fiat currencies tends to decline, making gold an attractive alternative store of value. Mining companies benefit from this trend as demand for gold increases, driving up prices and, in turn, their profitability.

Given this backdrop, investors could scoop up shares of fundamentally stable gold mining stocks Barrick Gold Corporation (GOLD), Agnico Eagle Mines Limited (AEM), and Gold Fields Limited (GFI) for investment to hedge against inflation.

Geopolitical tensions and central bank policies are key drivers for gold prices. In the last two years, governments added over 2,000 tonnes of gold to their reserves. With central banks around the world diversifying their reserves by adding gold, mining companies stand to benefit from the sustained demand. Additionally, global uncertainties often lead to increased gold buying, further boosting the profitability of mining operations.

The industry has seen steady growth, fueled by higher gold prices and improved extraction technologies. The adoption of upcoming modern and sophisticated digital tools improves the ability to monitor processes.

Technologies such as the Internet of Things (IoT), sensors, autonomous vehicles, drones, and digital twins enhance safety, ease mine prospecting, and establish predictive mechanisms. Many companies are reinvesting in exploration to expand reserves, ensuring a long-term supply pipeline.

Moreover, the gold mining industry is anticipated to reach $274.2 billion by 2032, exhibiting a CAGR of 3.5%. Gold mining stocks offer a dual advantage to long-term investors, a hedge against inflation and the potential for capital appreciation.

Considering the industry’s conducive trends, let’s delve into the fundamentals of the top three Miners – Gold stocks, starting with the third choice.

Stock #3: Barrick Gold Corporation (GOLD)

2024 STOCK MARKET OUTLOOK

Headquartered in Toronto, Canada, GOLD is a gold and copper producer, engaged in engages in the exploration, mine development, production, and sale of gold and copper properties internationally. It also explores and sells silver and energy materials.

On December 16, GOLD paid a quarterly dividend of $0.10 per share to its shareholders. GOLD pays an annual dividend of $0.40, which translates to a yield of 2.58% at the current share price. Its four-year average dividend yield is 3.02%. Moreover, the company’s dividend payouts have increased at a CAGR of 14.9% over the past five years.

On October 2, GOLD announced the launch of the Super Pit development at Barrick’s Lumwana copper mine by Zambian President Hakainde Hichilema and his cabinet. This launch should reinforce the company’s commitment to expanding its copper operations, driving growth, and strengthening its position in the global copper market.

During the third quarter of 2024, which ended on September 30, GOLD’s revenues increased 17.7% year-over-year to $3.37 billion. Its attributable EBITDA rose 20.6% from the year-ago value to $1.29 billion with a margin of 46% (up 100 bps year-over-year). Its adjusted net earnings stood at $529 million and $0.30 per share, up 26.6% and 25% year-over-year, respectively. Also, the company’s free cash flow for the quarter increased 23.7% from year-ago value to $444 million.

Street expects GOLD’s revenue for the fiscal fourth quarter (ending December 2024) to increase 34.8% year-over-year to $4.12 billion. Moreover, its EPS estimate of $0.45 for the same period indicates a 65.5% year-over-year growth. In addition, it surpassed the consensus revenue and EPS estimates in three of the trailing four quarters, which is excellent.

GOLD shares have surged 3% intraday to close the last trading session at $15.97.

GOLD’s POWR Ratings reflect this robust outlook. The stock has an overall rating of B, which equates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.

GOLD has a B grade for Growth and Quality. It is ranked #13 out of 41 stocks in the Miners – Gold industry. Click here to see the additional ratings for GOLD (Value, Momentum, Stability, and Sentiment).

Stock #2: Agnico Eagle Mines Limited (AEM)

Based in Toronto, Canada, AEM is a gold mining company that explores, develops, and produces precious metals. The company’s mines are located in Canada, Australia, Finland and Mexico.

On December 12, AEM announced the acquisition of O3 Mining Inc. (OIIIF) through a wholly-owned subsidiary that offers to acquire all of the issued and outstanding common shares of O3 Mining for $1.67 in cash per common share. This acquisition is the integration of the Marban Alliance property to the Canadian Malartic land package, creating significant and unique synergies.

On November 12, AEM was awarded $10 million from the Province of Ontario’s Skills Development Fund Training Stream to provide a comprehensive skills development program to support the availability of a qualified workforce in the mining industry. This award will address the needs of the labor market and strengthen the economic future of the mining industry.

AEM’s revenues from mining operations for the third quarter (ended September 30, 2024) increased 31.2% year-over-year to $2.16 billion. The company reported an adjusted EBITDA of $1.26 billion, indicating a 63.5% growth from the prior year quarter.

AEM’s adjusted net income came in at $572.60 million and $1.14 per share, reflecting increases of 165% and 159.1% year-over-year, respectively. Moreover, its free cash flow rose 653.8% from the same period last year to $620.40 million.

The consensus revenue estimate of $2.16 billion for the fiscal fourth quarter (ending December 2024) represents a 22.8% increase year-over-year. The consensus EPS estimate of $1.20 for the same quarter indicates a 111.3% improvement year-over-year. The company has an impressive surprise history; it surpassed the consensus revenue and EPS estimates in each of the trailing four quarters.

Over the past year, the stock has surged 51.7%, closing the last trading session at $81.99.

AEM’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.

It also has a B grade for Growth, Sentiment, and Quality. Within the Miners – Gold industry, it is ranked #12. Click here to see AEM’s ratings for Value, Momentum, and Stability.

Stock #1: Gold Fields Limited (GFI)

Headquartered in Sandton, South Africa, GFI operates as a gold producer with reserves and resources in Chile, South Africa, Ghana, Canada, Australia, and Peru. It also explores copper and silver deposits.

On December 2, GFI and Torq Resources Inc. announced getting into a definitive Implementation Agreement for the Santa Cecilia Project. Under this agreement, GFI is to acquire up to 75% indirect interest in the project by funding $48 million.

For the six-month period that ended on June 30, 2024, GFI’s revenue amounted to $2.12 billion. The company’s profit attributable to owners of the parent came in at $389 million and $0.43 per share.

Analysts expect GFI’s revenue and EPS for the fiscal year (ending December 2024) to grow 9.7% and 27.6% year-over-year to $4.94 billion and $1.20, respectively. For the fiscal year 2025, its revenue is expected to increase 26.4% year-over-year to $6.24 billion, while its EPS is forecasted to settle at $2.01, indicating a 67.5% improvement over the prior year.

The stock has gained 6.5% intraday to close the last trading session at $14.06.

It’s no surprise that GFI has an overall rating of B, equating to a Buy in our POWR Ratings system. It has a B grade for Sentiment and Quality. Out of 41 stocks in the same industry, GFI is ranked #7.

Beyond what is stated above, we’ve also rated GFI for Growth, Value, Momentum, and Stability. Get all GFI’s ratings here.

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AEM shares were trading at $81.23 per share on Friday afternoon, down $0.76 (-0.93%). Year-to-date, AEM has gained 3.86%, versus a 0.98% rise in the benchmark S&P 500 index during the same period.