Investing in precious metal mining stocks is an extremely popular endeavour. And while some industries are more volatile than others, like lithium miners, gold investors finally have something to cheer about. After years of underperformance, gold has finally broken out to the upside and is regaining its swagger as a stable metal.
The S&P/TSX Global Gold Index has outperformed the TSX Index in 3 of the last 4 years. The driver of this is no doubt the global pandemic followed by large-scale inflation. However, that is what many hold gold and gold stocks for in the first place, uncertainty and high inflation.
Considering gold makes up a ton of Canadian stocks on the TSX, it's essential for the Index that they succeed.
What are the top Canadian gold stocks to buy right now?
Agnico Eagle Mines (TSE:AEM)
Agnico Eagle Mines is a Canadian-based gold mining company that operates in multiple locations worldwide. Founded in 1957, the company has established a reputation for its responsible mining practices, environmental stewardship, and commitment to the safety and well-being of its employees.
Agnico Eagle's mining operations are primarily located in Canada, Mexico, and Finland.
The company's key mines in Canada include LaRonde, Meadowbank, and Meliadine. In Mexico, it operates the Pinos Altos and Creston Mascota mines. In Finland, Agnico Eagle has a 50% interest in the Kittilä mine, one of Europe's largest gold producers.
In 2021, Agnico Eagle Mines announced a merger with Kirkland Lake Gold, another Canadian-based gold mining company. The merger created one of the largest gold mining companies in the world, with a market cap of over $27 billion at that time.
The combined company operates eight mines across Canada, the United States, and Australia. It is expected to produce over 2.4 million ounces of gold annually. This is why it is often considered one of the best gold stocks in Canada.
The company is expected to post earnings of $2.93 per share in Fiscal 2023. This would be relatively flat growth from 2022. The company is far from cheap at the time of update, trading at 20x forward earnings. However, it is one of the more established gold players and generates strong cash flows. Hence, investors are likely willing to pay a premium.
Barrick Gold Corp (ABX.TO)
Let's go to another one of the world's largest gold producers - Barrick Gold (TSX:ABX). It is once again worthy of being among the top gold stocks in the country.
Barrick is making significant progress in reducing its debt. In 2015, the company had nearly $17B in debt. Fast forward to 2023, and it carries only $6.3B of long-term debt on the balance sheet.
This has caused a notable improvement in the company's debt-to-equity ratio, going from nearly 1.3 in 2015 to just 0.20 in 2023.
Another interesting aspect that many investors don't know about is that Barrick has exposure to copper. Given the current copper bull cycle, Barrick is well-positioned to benefit.
It is also worth noting that Barrick has recommitted to returning cash to shareholders. The company hit Canadian Dividend Aristocrat status with five straight years of dividend growth. The company announced plans to return additional money to shareholders via return of capital distribution.
Barrick is expected to see double digit earnings growth in 2023 relative to last year, and is expected to continue growing those earnings at a double digit clip through 2024.
If you're looking for a blue-chip gold player, Barrick deserves a spot on your watchlist.
Despite being included in our list of gold miners a few times over the years, B2Gold (TSX:BTO) hasn't entirely delivered to the extent we believed it would. But, we are not quite ready to give up on it yet.
Over the last few years, B2Gold has faced some operational issues that have impacted its production. In 2019, the company's Masbate mine in the Philippines was hit by a typhoon, causing significant damage to its facilities and temporarily halting production.
Additionally, in 2020, B2Gold's Fekola mine in Mali experienced a brief work stoppage due to a labour dispute. These are the risks when investing in companies that have assets in less safe geo-political jurisdictions.
Despite these setbacks, B2Gold has continued to increase its production levels. In 2022, the company produced over 1 million ounces of gold, a new record. B2Gold's growth is expected to continue as the company invests in new mining projects and explores new opportunities in the gold mining industry.
It is expected to post earnings per share of around $0.40 in 2023, which would mark double-digit growth from Fiscal 2022 levels. However, growth rates aren't expected to be the best in 2024, as earnings are expected to stay flat. This company does have a lot of potential. However, it still deals with operation issues that may hold earnings back.
If you can handle a higher risk/higher reward profile, B2Gold may offer the highest upside in the industry. Analysts have a one-year target in the high $7 range, implying nearing 100% upside at the time of writing.
Wesdome Mine (WDO.TO)
Wesdome Mines is a Canadian gold mining stock primarily located in Ontario, Canada. The company produces high-grade gold ore from its Eagle River and Mishi gold mines, focusing on sustainable and responsible mining practices.
Wesdome Mines has faced some operational issues in the past, including challenges related to water management, but has demonstrated a commitment to addressing these challenges through investments in infrastructure and technology.
Wesdome Mines is well-positioned to benefit from a strong gold market and rising investor interest in sustainable mining practices. With a solid track record of operational excellence and a commitment to responsible mining, the company is poised for continued success in the years ahead.
The company experienced a surge in price in the past, touching nearly $16.50 in May of 2022. However, it has witnessed a significant drawdown in price to just under $7 at the time of update. The company is now attractive again from a valuation standpoint.
This is a higher-risk gold opportunity in 2023, as the company is expected to continue to post a loss this year, breakeven at best. However, investments made into its production, exploration, and expansion are expected to pay off in Fiscal 2024. Analysts expect the company to grow revenue by more than 60%, and earnings are expected to be in the $0.48 range. If it does hit these estimates, it would be trading at only 14x its expected 2024 earnings.
When we look to 2025 earnings, analysts have the company earning nearly $0.80 a share. There is one thing for certain, it's the fastest growing gold stock on this list when we look to analyst estimates.
Along with B2Gold, this is a higher risk/higher reward play. It's probably the riskiest gold stock on this list. Still, it also likely has the most upside potential over the long-term if it can continue to push out results.
Franco-Nevada Corporation (FNV.TO)
Franco Nevada's (TSX:FNV) recent performance has justified its position as the number one gold stock in the country. Franco Nevada's business model allowed it to outperform when the pandemic was causing mine shutdowns.
It continues to do so through the first half of 2023. It has been one of the best-performing large-cap gold stocks over the last few years and has trounced the returns of some other major players in the industry, even other royalty companies.
Why the significant outperformance? As we've discussed, Franco Nevada is a streamer, and in a bearish environment, streamers will outperform producers.
Year in and year out, Franco Nevada is a pillar of consistency. While the company's exposure to oil & gas has undoubtedly helped during oil's current bull run, it's still a gold-streaming play. Management aims to have 80% of its revenues come from precious metals. So much so that it even measures its oil and gas streaming revenues in "GEOs" or Gold Equivalent Ounces.
The most significant advantage to owning a streaming company is that the high capital expenditures and operational mining costs do not saddle it. This allows the company to generate large cash flows.
While many gold stocks are now re-introducing dividends or have re-established themselves as dividend growth stocks, Franco-Nevada is the industry's most reliable dividend growth stock.
It was the only one to maintain its growth streak during the last bear market and is a Canadian Dividend Aristocrat, having raised dividends for 15 straight years.
Reliability is key in this sector, and Franco Nevada is as reliable as it gets.
Why have physical gold and Canadian gold stocks generally made a comeback?
Market volatility, especially with the bear market in 2022 and somewhat in 2023. We watched Canadian tech stocks soar during lockdowns and ultra-low interest rate environments.
Many investors believe it could be golds turn in a high inflation, high rate environment.
If you're new to buying stocks in Canada, you may not know that gold bullion has long been considered a haven for investors in times of uncertainty.
In the face of recent volatility and uncertain geo-political environment, investors have begun to once again warm to the precious metal. This bodes well for the top gold stocks and the price of gold.
There is also another catalyst that can support gold's price. Industry experts believe we reached peak gold in 2017, which means that moving forward, world gold extraction will decline. There has been a significant decrease in exploration, and the lack of reserve replacements has experts leaning bullish.
So, as a result, let's look at some of the best opportunities in terms of Canadian gold stocks in the market today.