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Metals have been quietly making their way higher as stocks have continued their recent decline. Historically viewed as a hedge against inflation and currency devaluation, precious metals can be a great portfolio diversifier – particularly during times when most equities are falling.
There are numerous ways to gain exposure to precious metals. In addition to owning physical metals, investors can access these commodities through exchange-traded funds, mutual funds, mining company stocks, and the derivatives market. Well-recognized metals include platinum and palladium, but the two most widely followed are gold and silver.
Gold is a unique precious metal known for its extreme durability, malleability, and heat and electricity conduction properties. Most investors are familiar with gold as an input for jewelry-making. While gold is perceived more as a store of value, silver is viewed as more of an industrial metal. Silver has historically been more volatile than gold and is known for its outsized rallies during precious metal bull runs.
While the past few months have been treacherous for passive equity investors, gold and silver have made a stealthy move higher. We can see below that both gold (+3.94%) and silver (+4.34%) have outperformed the S&P 500 (-8.23%) year-to-date.
Image Source: Stockcharts.com
One of the best ways to target these metals from an investment perspective is to own the stocks of mining companies. These stocks typically outperform the underlying precious metals due to growth in their intrinsic value.
Precious metals do not have the potential for intrinsic value growth as stocks do. The ability of companies to increase their intrinsic value has always enabled stocks to outperform other types of investments. As the intrinsic value of a company grows, the company can increase its production or services which in turn creates more income.
We can see this playing out in 2022, as the three stocks we will discuss below have been handily outperforming both gold and silver. All three companies are part of the Zacks Mining – Miscellaneous industry group, which ranks in the top 40% of all Zacks Ranked Industries. By targeting stocks in the top industry groups, we can dramatically improve our investing success.
Teck Resources is engaged in the exploration, development, and production of natural resources in Asia, Europe, and North America. TECK’s primary products include steelmaking coal as well as copper and zinc concentrates. The company also produces gold, silver, germanium, and cadmium, as well as chemicals and fertilizers. TECK Resources was founded in 1913 and is headquartered in Vancouver, Canada.
Higher prices of the company’s principal products along with a solid pipeline of projects have contributed to TECK’s bullish run. A Zacks Rank #1 (Strong Buy) stock, TECK has exceeded earnings estimates in six of the past seven quarters. Shares of TECK are up nearly 25% just this year alone.
Teck Resources Ltd Price and EPS Surprise
Despite the impressive performance, the stock trades at just a 6.46 forward P/E which makes it relatively undervalued when compared to that of its industry (9.48 forward P/E).
Earnings estimates for the current quarter have seen positive changes as of late. The Q1 consensus estimate has been revised upward by 50.83% to $1.81 in just the past 60 days. TECK is scheduled for its Q1 earnings announcement on April 27th.
Analysts have also increased their full-year EPS estimates for TECK by 30.14% in the past two months. The 2022 Zacks Consensus EPS Estimate now stands at $5.57, translating to potential growth of 23.23% relative to last year. Sales are seen rising 12.15% to $12.05 billion.
Sibanye Stillwater operates as a precious metals mining company in South Africa, the U.S., Canada, Zimbabwe, and Argentina. SBSW produces gold, platinum, palladium, and rhodium, in addition to by-products such as nickel, copper, and chrome. Sibanye Stillwater was founded in 2013 and is based in South Africa.
A Zacks #2 (Buy) stock, SBSW shares have advanced over 52% since the start of the year. The stock has handily outperformed both the S&P 500 as well as underlying precious metals. Even with the remarkable outperformance, SBSW is relatively undervalued at a 5.3 forward P/E when compared to the 9.48 forward P/E of its industry group.
Sibanye Gold Limited Price and EPS Surprise
Analysts are bullish on SBSW and have upped their 2022 EPS estimates by 17.21% in the past 60 days. The Zacks Consensus Estimate now stands at $3.61, reflecting growth of 41.02% versus last year. SBSW sales are projected to climb 26.95% to $9.83 billion.
Newmont is engaged in the exploration and production of gold, copper, silver, zinc and lead. NEM operates primarily in North America, South America, Australia, and Africa. The Colorado-based firm was founded in 1916 and is one of the world’s largest producers of gold with several active mines in Peru, Australia, Ghana, and Nevada.
Back in 2019, NEM entered into a deal with Goldcorp to acquire all of the latter’s outstanding common shares in a stock-for-stock transaction. NEM has been benefitting from the merger and is projected to generate an annual benefit of approximately $165 million per year. Furthermore, annual pre-tax synergies and full potential benefits for NEM are anticipated to create value of more than $2.5 billion. Shares have risen nearly 7% to kick off the new year.
Newmont Corporation Price and EPS Surprise
NEM most recently reported Q4 EPS this past week of $0.78, a +2.63% beat over the $0.76 consensus. Q1 estimates have been revised upward by 31.15% in the past 60 days. The Zacks Consensus Estimate now stands at $0.80, which would represent an 8.11% growth rate relative to the same quarter in 2021. NEM is slated to report its Q1 results on May 5th.
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Metals Stage Rally: Gold and Silver Shine
Metals have been quietly making their way higher as stocks have continued their recent decline. Historically viewed as a hedge against inflation and currency devaluation, precious metals can be a great portfolio diversifier – particularly during times when most equities are falling.
There are numerous ways to gain exposure to precious metals. In addition to owning physical metals, investors can access these commodities through exchange-traded funds, mutual funds, mining company stocks, and the derivatives market. Well-recognized metals include platinum and palladium, but the two most widely followed are gold and silver.
Gold is a unique precious metal known for its extreme durability, malleability, and heat and electricity conduction properties. Most investors are familiar with gold as an input for jewelry-making. While gold is perceived more as a store of value, silver is viewed as more of an industrial metal. Silver has historically been more volatile than gold and is known for its outsized rallies during precious metal bull runs.
While the past few months have been treacherous for passive equity investors, gold and silver have made a stealthy move higher. We can see below that both gold (+3.94%) and silver (+4.34%) have outperformed the S&P 500 (-8.23%) year-to-date.
Image Source: Stockcharts.com
One of the best ways to target these metals from an investment perspective is to own the stocks of mining companies. These stocks typically outperform the underlying precious metals due to growth in their intrinsic value.
Precious metals do not have the potential for intrinsic value growth as stocks do. The ability of companies to increase their intrinsic value has always enabled stocks to outperform other types of investments. As the intrinsic value of a company grows, the company can increase its production or services which in turn creates more income.
We can see this playing out in 2022, as the three stocks we will discuss below have been handily outperforming both gold and silver. All three companies are part of the Zacks Mining – Miscellaneous industry group, which ranks in the top 40% of all Zacks Ranked Industries. By targeting stocks in the top industry groups, we can dramatically improve our investing success.
Image Source: Stockcharts.com
Teck Resources Limited (TECK - Free Report)
Teck Resources is engaged in the exploration, development, and production of natural resources in Asia, Europe, and North America. TECK’s primary products include steelmaking coal as well as copper and zinc concentrates. The company also produces gold, silver, germanium, and cadmium, as well as chemicals and fertilizers. TECK Resources was founded in 1913 and is headquartered in Vancouver, Canada.
Higher prices of the company’s principal products along with a solid pipeline of projects have contributed to TECK’s bullish run. A Zacks Rank #1 (Strong Buy) stock, TECK has exceeded earnings estimates in six of the past seven quarters. Shares of TECK are up nearly 25% just this year alone.
Teck Resources Ltd Price and EPS Surprise
Despite the impressive performance, the stock trades at just a 6.46 forward P/E which makes it relatively undervalued when compared to that of its industry (9.48 forward P/E).
Earnings estimates for the current quarter have seen positive changes as of late. The Q1 consensus estimate has been revised upward by 50.83% to $1.81 in just the past 60 days. TECK is scheduled for its Q1 earnings announcement on April 27th.
Analysts have also increased their full-year EPS estimates for TECK by 30.14% in the past two months. The 2022 Zacks Consensus EPS Estimate now stands at $5.57, translating to potential growth of 23.23% relative to last year. Sales are seen rising 12.15% to $12.05 billion.
Sibanye Stillwater Limited (SBSW - Free Report)
Sibanye Stillwater operates as a precious metals mining company in South Africa, the U.S., Canada, Zimbabwe, and Argentina. SBSW produces gold, platinum, palladium, and rhodium, in addition to by-products such as nickel, copper, and chrome. Sibanye Stillwater was founded in 2013 and is based in South Africa.
A Zacks #2 (Buy) stock, SBSW shares have advanced over 52% since the start of the year. The stock has handily outperformed both the S&P 500 as well as underlying precious metals. Even with the remarkable outperformance, SBSW is relatively undervalued at a 5.3 forward P/E when compared to the 9.48 forward P/E of its industry group.
Sibanye Gold Limited Price and EPS Surprise
Analysts are bullish on SBSW and have upped their 2022 EPS estimates by 17.21% in the past 60 days. The Zacks Consensus Estimate now stands at $3.61, reflecting growth of 41.02% versus last year. SBSW sales are projected to climb 26.95% to $9.83 billion.
Newmont Corp. (NEM - Free Report)
Newmont is engaged in the exploration and production of gold, copper, silver, zinc and lead. NEM operates primarily in North America, South America, Australia, and Africa. The Colorado-based firm was founded in 1916 and is one of the world’s largest producers of gold with several active mines in Peru, Australia, Ghana, and Nevada.
Back in 2019, NEM entered into a deal with Goldcorp to acquire all of the latter’s outstanding common shares in a stock-for-stock transaction. NEM has been benefitting from the merger and is projected to generate an annual benefit of approximately $165 million per year. Furthermore, annual pre-tax synergies and full potential benefits for NEM are anticipated to create value of more than $2.5 billion. Shares have risen nearly 7% to kick off the new year.
Newmont Corporation Price and EPS Surprise
NEM most recently reported Q4 EPS this past week of $0.78, a +2.63% beat over the $0.76 consensus. Q1 estimates have been revised upward by 31.15% in the past 60 days. The Zacks Consensus Estimate now stands at $0.80, which would represent an 8.11% growth rate relative to the same quarter in 2021. NEM is slated to report its Q1 results on May 5th.