Gold had a difficult year in 2021 as investors focused on stocks and cryptocurrencies like Bitcoin and Ethereum.
The metal’s price rose by just 2% in 2021, while the S&P 500 index rose by more than 28%, and Bitcoin doubled. Gold mining stocks also languished in 2020 (see the comparison with the gold price in the chart above). The VanEck Gold Miners ETF crashed over 7%. In this article, we will look at some of the best gold mining stocks to buy in 2022.
Newmont Corporation (NYSE: NEM) is the biggest gold mining company in the world, with a total market capitalization of about $47 billion. In 2021, the Newmont stock price crashed by 4% as the prices of gold retreated.
The company has operations in Africa, Australia, North America, and South America. It has around 94.2 million attributable ounces of gold. Most of these reserves are in North America, followed by South America. At the current price, these reserves are worth more than $170 billion.
Like all gold companies, the Newmont Corporation stock price has a close correlation to the overall performance of gold. Higher gold prices usually lead to more revenue and net income.
In the past few years, Newmont has been adding more acreage into its balance sheet. It completed the acquisition of Goldcorp in 2019 in a $10 billion deal. And in 2021, the firm acquired GT Gold in a $393 million deal.
Newmont’s business has been quite stable despite the lagging gold price. For example, in 2020, the company’s revenue increased to more than $11.97 billion, while its net income jumped to over $163 million.
Newmont is a good gold stock because of its size and the fact that it is one of the most profitable gold mining companies in the world.
Barrick Gold (NYSE: GOLD) is the second-biggest gold mining company in the world. It has a market capitalization of more than $33 billion and a dividend yield of about 1.20%. The company’s stock price crashed by more than 11% in 2021 as gold prices wobbled.
The Canadian-headquartered company has operations in a number of countries like the United States, Tanzania, Saudi Arabia, and Mali.
Unlike Newmont, Barrick Gold operates in two key verticals. Gold is its main business and accounts for more than 90% of its total revenue. The company also has some copper mines. This is important since copper prices did well in 2021 as investors anticipated more demand as the world economy recovered.
Barrick Gold benefited from high gold prices in 2020. At the time, its revenue jumped from $9.7 billion in 2019 to exceed $12 billion in 2020. It has risen to about $11 billion in the trailing twelve months, while its net income has risen to $2 billion.
Therefore, because of its size, the Barrick Gold stock price will likely rebound if the prices of gold and copper recover in 2022. Even if they don’t, investors will benefit from the dividends that the company pays to investors.
Franco-Nevada Corporation (NYSE: FNV) is the third-biggest gold company in the world after Newmont and Barrick Gold. The firm has a market capitalization of over $25 billion and annual revenue above a billion dollars.
Franco-Nevada has operations in countries like the US, Canada, Mexico, and other South American countries.
While gold is its biggest segment, Franco-Nevada’s business is diversified. The company makes a lot of money in silver and platinum group metals (PGM) like platinum and palladium. It is also a small player in the energy sector.
Another difference between Franco-Nevada and the other companies is its business model. While Newmont and Barrick Gold have thousands of employees, FNV has only 35 full-time employees and 5 part-time ones. This is simply because the company does not own mines directly. Instead, it generates royalties from other miners that operate the mines.
This trend has made its business more profitable than that of Newmont mining. While Newmont has annual revenues of more than $11 billion and a net income of $163 million, FNV has revenue of about $1 billion and a net income of $363 million.
FNV is also a good gold stock to invest in because of its commitment to shareholders. The firm has increased its dividends in the past 14 consecutive years.
Wheaton Precious Metals
Wheaton Precious Metals (WPM) is a large mining company valued above $19 billion. It generates more than $1 billion in revenue and about $500 million in profits.
The company uses a different revenue model from Newmont and Barrick Gold. Instead of mining, the company has made agreements to buy all or a portion of precious metals for an upfront payment. It currently has deals in about 24 gold mines. This model helps it take advantage of the performance of gold prices while avoiding the risks associated with mining.
The model helped the company grow its profit from over $86.1 million in 2019 to more than $501 million in 2020. It then distributed most of these funds to shareholders. It is one of the best gold stocks to invest in.
Newcrest Mining (NCMGF) is another leading gold mining company worldwide. It has a market cap of $15 billion and more than $4 billion in profits. It is also a highly profitable company that makes over $1 billion in profits. The company’s existing gold mines have an average life of about 24 years. Most of its mines are in Australia, Canada, and Papua New Guinea.
Newcrest Mining is a good gold mining stock because of its huge reserves and the fact that the company is generous to its shareholders in terms of dividends.
It is unclear whether gold prices will rebound in 2022 even as the Federal Reserve embraces a hawkish tone. If it does, these companies stand a chance to benefit more. Also, investors will benefit from the dividends by these companies if gold maintains its current range.