Keep An Eye On These Gold Stocks Next Year
Gold is a commodity that has historically been viewed as a good hedge against inflation, which is why the precious metal’s price performance over the last year has been a bit puzzling.
The SPDR® Gold Shares ETF (NYSE:GLD), which is intended to reflect the performance of the price of gold bullion, is down over 8% year-to-date and has been a major underperformer. Meanwhile, inflationary pressures have persisted throughout the year and interest rates have been held at historic lows, which in theory should have led to a strong year for gold investors.
While this commodity certainly hasn’t been the strongest performer as of late, there are still plenty of narratives that support the possibility of a gold rally in 2022. If we continue seeing alarming signs of inflation and if nominal yields are held lower, stocks that offer exposure to the safe-haven commodity could have room to run. That’s why it’s a good idea to get familiar with some of the best gold stocks in the market as we head into the new year.
Keep reading below for 3 gold stocks to watch in 2022.
1. Newmont Goldcorp
Gold mining stocks offer an interesting way to gain exposure to the commodity, as they typically will rise and fall with the price of gold, yet can also remain profitable companies even if the price of gold is declining. Newmont Goldcorp (NYSE:NEM) is certainly one of the best options to consider if you are interested in gold miners, as it’s the world’s largest gold producer and a company with a rock-solid balance sheet.
It’s also a stock that offers exposure to copper, which is another commodity that has been a strong performer in 2021 and could continue benefitting from high demand as the global economy recovers.
Newmont has assets and operations in North America, South America, Australia/New Zealand, and Africa, and generates the majority of its revenue from gold from those locations. It’s the type of investment that market participants love to buy when there is volatility and uncertainty at play in the market, which means it’s a great pick if you think next year could be a bumpy ride for the economy.
It’s also a stock that offers a very attractive dividend yield of 3.75%, which is certainly appealing given inflation concerns. This could be one of the first stocks to rally should gold prices head higher in the coming months, which absolutely makes it worth watching as we begin the new year.
Royal Gold
Another way to add exposure to gold via equities is with gold streaming and royalty companies like Royal Gold (NASDAQ:RGLD). These are businesses that pay fees to mining companies in exchange for either a percentage of the mine’s revenue or the ability to purchase precious metals in the future at a fixed price.
This is an attractive model because it allows Royal Gold to potentially take advantage of gains in the precious metals sector without a lot of the costs and risks that are associated with mining operations. The company has a diverse portfolio with revenue from 44 producing properties, and over $1.1 billion of liquidity provides plenty of room for Royal Gold to seek out new deals.
The stock is also worth a look thanks to its long history of dividend growth, as Royal Gold announced its 21st consecutive annual dividend increase back in November. After a 17% dividend increase, the stock is certainly one of the more attractive gold stocks to consider for 2022.
Finally, it’s worth noting that many of the company’s operating counterparties have dealt with issues related to COVID-19 that stunted mining production, which means a rebound is likely on the cards next year.
3. Franco-Nevada
Finally, we have another gold-focused royalty and streaming company called Franco-Nevada (NYSE:FNV). The company claims to have the most diverse royalty and streaming portfolio by asset, operator, and country, which includes 324 mining assets and 82 energy assets.
It’s also worth mentioning Franco-Nevada’s balance sheet strength, as it's one of the only companies in the mining industry without any debt. The strong balance sheet and efficient business model has allowed the company to reward long-term shareholders with annual dividend increases for 14 consecutive years, which is certainly another positive to consider.
In Q3, Franco-Nevada Corp reported revenue growth of 13% to $316.3 million and Adjusted EBITDA growth of 15% to $269.8 million. The company is on its way towards delivering a record-breaking 2021, although the share price is well off highs at this time. It’s certainly one of the best gold stocks to watch in 2022, so keep an eye on how it performs in the coming weeks.