5 Gold Mining Stocks to Buy as Industry Prospects Look Bright

Yahoo

20-06-2025

The prospects for the Zacks Mining - Gold industry look bright, backed by the 28.5% growth seen in gold prices so far this year. The bullion is expected to trend higher, supported by escalating geopolitical tensions and central bank buying.With gold prices expected to increase further on demand-supply imbalance, companies like Newmont Mining NEM, Franco-Nevada Corporation FNV, Kinross Gold KGC, Eldorado Gold EGO and New Gold NGD are well-positioned to capitalize on this, backed by their strong balance sheets, efforts to lower costs and growth initiatives.
About the Industry
The Zacks Mining - Gold industry comprises companies engaged in extracting gold from mines. These mines may either be underground or open pits. Mining is a long and complex process and requires significant financial resources. It involves exploring to evaluate a deposit's size; assessing ways to extract and process ore efficiently, safely and responsibly; and developing the mine before the actual mining process. It usually takes 10-20 years for a gold mine to produce material that can finally be refined. Nowadays, industry players use a range of sophisticated techniques to extract gold and convert it into dore bars, an alloy of gold and silver, alongside other impurities. These are then sent for purification, after which gold is purchased as bars or coins, or used in jewelry or other purposes.
Major Trends Shaping the Future of the Mining-Gold Industry
Solid Trend in Gold Prices to Drive Industry Growth: Gold prices gained 28.5% so far this year, supported by strong safe-haven demand, geopolitical tensions and escalating trade conflict. Central banks worldwide have been accumulating gold reserves. Prices of the yellow metal catapulted to a record high of $3,500 per ounce in April. Central banks are expected to continue the 1,000-ton-plus buying streak this year. Also, hopes of interest rate cuts and geopolitical tensions will continue to fuel the yellow metal's rally.Efforts to Counter High Costs to Sustain Margins: The industry has been facing a shortage of skilled workforce, causing a spike in wages. Industry players are grappling with escalating production costs, including electricity, water, and material and supply-chain issues. Since the industry cannot control gold prices, it focuses on improving the sales volume and the operating cash flow, as well as lowering unit net cash costs. The industry participants are opting for alternate energy sources, such as solar or wind farms, to minimize fuel-price volatility and secure supply. Miners are committed to cost-reduction strategies and digital innovation to drive operating efficiencies.Demand & Supply Imbalance to Support Prices: Depleting resources, declining supply in old mines and the lack of new mines have been inherent threats to the industry. Due to the scarcity of discoveries and exhaustive existing resources, miners prefer building up reserves through acquisitions rather than digging new ones that are risky and capital-intensive. On the demand side, the use of gold in energy, healthcare and technology is rising. India and China account for around 50% of consumer gold demand. Gold demand in India will remain strong on improving economic momentum and consumer confidence. The yellow metal has long been considered a safe-haven investment amid financial or political uncertainty. Central banks have been ramping up reserves held in gold due to currency depreciation and geopolitical and economic risks. Therefore, there will be an eventual demand-supply imbalance, which will likely drive gold prices.
Zacks Industry Rank Indicates Bright Prospects
The group's Zacks Industry Rank, the average of the Zacks Rank of all the member stocks, indicates encouraging near-term prospects. The Zacks Mining - Gold Industry, which is a 38-stock group within the broader Zacks Basic Materials sector, currently carries a Zacks Industry Rank #50, which places it in the top 20% of 245 Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1.Before we present a few stocks that you may want to consider for your portfolio, let us take a look at the industry's recent stock-market performance and valuation picture.
Industry Versus S&P 500 & Sector
The Mining-Gold Industry has outperformed the sector and the Zacks S&P 500 composite over the past year. The stocks in the industry have collectively grown 53.9% against the broader sector's decline of 3.5%. The S&P 500 has gained 9.4% in the same timeframe.
Industry's Current Valuation
On the basis of the trailing 12-month EV/EBITDA, a commonly used multiple for valuing gold-mining companies, we see that the industry is currently trading at 8.06X compared with the S&P 500's 16.87X and the Basic Material sector's trailing 12-month EV/EBITDA of 12.7X. This is shown in the charts below.
Over the last five years, the industry traded as high as 33.37X and as low as 5.23X, the median being 7.83X.
Five Mining-Gold Stocks to Keep an Eye on
Franco-Nevada: FNV appears to be on a promising long-term trajectory, backed by a healthy portfolio of streaming and royalty agreements on several properties mined by some of the most reputable mining companies in the world. The company is debt-free and uses its free cash flow to expand the portfolio and pay out dividends. Franco-Nevada has been enhancing its portfolio without adding significant overhead. It recently inked a deal to acquire an existing royalty package on the Côté Gold Mine in Ontario for $1.05 billion in cash. This move will boost its portfolio and add immediate gold flow from one of Canada's newest large-scale gold mines. FNV shares have gained 7.5% over the past three months.
The Zacks Consensus Estimate for this Toronto, Canada-based company's earnings for fiscal 2025 has moved up 6% over the past 60 days. The estimate indicates 39.6% year-over-year growth. FNV has a trailing four-quarter earnings surprise of 1.6%, on average. The company has a long-term estimated earnings growth of 14.2% and currently sports a Zacks Rank #1(Strong Buy).
You can see the complete list of today's Zacks #1 Rank stocks here.
Newmont: The company's acquisition of Newcrest Mining created an industry-leading portfolio with a multi-decade gold and copper production profile in the most favorable mining jurisdictions globally. Newmont has been divesting non-core businesses as it shifts its strategic focus to Tier 1 assets. The company has a strong liquidity position and generates substantial cash flows, which allow it to fund its growth projects, meet short-term debt obligations and drive shareholder value. It is pursuing several projects, including Tanami Expansion 2 in Australia, the Ahafo North expansion in Ghana and Cadia Panel Caves in Australia, which are expected to expand production capacity and extend mine life, driving revenues and profits. NEM shares have gained 23% over the past three months.
Headquartered in Denver, CO, Newmont has a trailing four-quarter earnings surprise of 32.4%, on average. The Zacks Consensus Estimate for NEM's 2025 earnings has moved up 12% over the past 60 days and indicates year-over-year growth of 20.2%. The company has a long-term estimated earnings growth of 14.2%. Newmont currently carries a Zacks Rank #2 (Buy).
Kinross Gold: The company's strong liquidity position and substantial cash flows allow it to finance its development projects while paying down debt and driving shareholder value. Kinross has a strong production profile and boasts a promising pipeline of exploration and development projects. Its key development projects and exploration programs, including Great Bear in Ontario and Round Mountain Phase X in Nevada, remain on track. These projects are expected to boost production and cash flow and deliver significant value. The company has also approved the mining of Phase 1 at the Redbird pit, which contains around 1 million ounces of gold reserve. KGC shares have gained 26.7% over the past three months. The Zacks Consensus Estimate for this Toronto, Canada-based gold mining company's earnings for fiscal 2025 has moved up 21% over the past 60 days. The estimate indicates 63.2% year-over-year growth. KGC has a trailing four-quarter earnings surprise of 16.1%, on average. The company has a long-term estimated earnings growth of 21.2% and currently carries a Zacks Rank of 2.
Eldorado Gold: The company's long-term demand prospects are supported by its long-life, high-quality asset portfolio and presence in solid mining jurisdictions. Its financial position helps it invest in growth projects. It has a solid pipeline of strategic growth projects – Skouries, Kisladag, Lamaque Complex and Olympias. Eldorado Gold is set to take its annual gold production to 660,000-720,000 ounces in 2027, suggesting 33% growth from 2024. Copper production is expected to start in 2026 and reach 70 million pounds by 2027. The company's shares have gained 31.8% over the past three months.
The Zacks Consensus Estimate for the Vancouver, Canada-based company's fiscal 2025 earnings has moved up 11% over the past 60 days. The estimate indicates year-over-year growth of 5%. The company has a long-term earnings growth estimate of 34.2%. EGO has a trailing four-quarter earnings surprise of 5.95%, on average. The company currently carries a Zacks Rank of 2.
New Gold: The company recently consolidated its interest in the New Afton mine to 100%, increasing its future free cash flow. NGD projects gold production to grow 37% between 2024 and 2027. This will be driven by increasing production profiles at both Rainy River and New Afton as growth projects are completed and ramped up in the near term. The company is expected to see a 65% reduction in AISC over the next three years. The updated Rainy River life-of-mine plan maintains a strong gold production profile. It is expected to produce 300,000 ounces of gold per year over the next three years. New Afton is expected to produce an average of 125,000 ounces of gold per year. NGD shares have gained 50% over the past three months.
The Zacks Consensus Estimate for Toronto, Canada-based New Gold's 2025 earnings indicates year-over-year growth of 95%. The estimate has moved up 5% over the past 60 days. The company has a trailing four-quarter earnings surprise of 5.95%, on average. NGD has a Zacks Rank of 2.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Newmont Corporation (NEM) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
Zacks Investment Research
Effettua l'accesso per consultare il tuo portafoglio