Precious Metal Stocks to Buy With Powell Reappointed as FED Chair
Precious metal stocks are outperforming the market right now with rising concerns over inflation. But, with President Biden nominating Jerome Powell as Fed chair for a second term, metal futures nosedived as a result.
The events suggest investors believe with Powell remaining in his position, certain policies will stay that are unfavorable for precious metal stocks.
With this in mind, the SPDR S&P Metals & Mining Index is up 55% in the past year. In comparison, the SPDR S&P 500 ETF is only up 32% in 2021. Despite investor sentiment fading, demand for metals should continue to grow with new industries like electric vehicles and 5G requiring them.
In light of this, here are the top precious metal stocks to buy with inflation rising.
Top Precious Metal Stocks to Buy
No. 6 First Majestic Silver (NYSE: AG)
- Market Cap: 3.14B
- EPS: .14
- P/E: 87.25
One of the more popular precious metal stocks on the list is First Majestic Silver. The mining company is focusing on silver production in Mexico, with several fully owned mines.
So far, the company has shown strong production growth, with expansions and acquisitions over the past ten years. In fact, in the third quarter, First Majestic produced 7.3 million silver equivalent ounces, a 1% increase from the previous quarter.
Not only that, but the company’s gold production has also stepped up. The company produced 54,525 ounces of gold in the quarter, a 17% increase from Q2. The jump in output comes from a massive increase in production at its Nevada mine.
More importantly, the company expects the growth to continue as it raises its outlook for full-year 2021.
No. 5 Royal Gold Inc. (Nasdaq: RGLD)
- Market Cap: 6.75B
- EPS: 4.04
- P/E: 25.26
Rather than taking on many risks with mining for precious metals, Royal Gold has a different business model. Instead, the company invests in royalties and streams to create a diverse portfolio.
Royalties are an interest that gives the company a percentage of the profits. At the same time, streams are contracts to purchase metals at a set price.
With this in mind, Royal Gold’s revenue split in 2021 is 69% streams and 31% royalties. What’s more, the company focuses on gold, with 74% of revenue coming from the popular metal. Besides gold, the firm also holds copper, silver, and others in its portfolio.
In the fourth quarter, Royal Gold saw record revenue of $168 million and a record cash flow of $120 million. Not only that, but the company is looking to increase sales further with two new investments including:
- Acquiring royalty on the Cote Gold Project.
- A new gold stream on the NX Gold Mine.
The company’s unique business model helps minimize risks, therefore making it one of the best precious metal stocks to own.
No. 4 Wheaton Precious Metals (NYSE: WPM)
- Market Cap: 19B
- EPS: 1.38
- P/E: 30.63
Wheaton Precious Metals stock was trending after its record-breaking earnings report earlier this month. But, since then, the stock has cooled off and is only up 0.5% this past month.
The company focuses mainly on gold and silver while mining other precious metals such as palladium and cobalt. Like Royal Gold, the company also saw record revenue, earnings and cash flow.
- Revenue – $923 million
- Earnings – $463 million
- Cash Flow – $650 million
On top of this, WPM is increasing its dividend to $0.15 per share, a sign of solid fundamentals. And lastly, the company is focused on growing its operations with a new streaming deal for the Fenix Gold Project.
No. 3 Newmont (NYSE: NEM)
- Market Cap: 44.2B
- EPS: 2.54
- P/E: 21.86
Like other miners on this list, Newmont saw its highest value after its first-quarter earnings with higher gold prices. The mining company has nine premier mines spread across the globe.
The world’s leading gold company produced 1.45 million ounces of gold with 315,000 in gold equivalent ounces in the third quarter. What’s more, Newmont is using the industry-first autonomous fleet to help move products. The fleet consists of over 36 trucks that’ll further the productivity and safety at its Boddington gold mine.
Additionally, the company is looking to solidify its position with several projects in the works.
- Near Term Projects – Ahafo North, Tanami Expansion 2 and Subika Underground.
- Longer-Term Projects – Yanacocha Sulfides.
All in all, Newmont has been slowly building its ability in the industry. And as a result, the company has returned over $2 billion to shareholders over the past year.
Keep reading to discover the top precious metal stocks right now.
Best Precious Metal Stock – No. 2 Barrick Gold (NYSE: GOLD)
- Market Cap: 34.7B
- EPS: 1.11
- P/E: 17.47
Despite a strong showing in Barrick Gold’s latest earnings, the stock is down 19% this year. The company is focusing on mining gold and copper with operations in 13 countries.
With this in mind, strong production in its Africa, Middle Eastern, and Latin America mines aligns them to meet its annual goal’s top level. So far, Barrick Gold’s production is reaching 3.23 million ounces of gold this year, with 1.09 Oz coming in Q3.
More importantly, the company has one of the industry’s highest quality portfolios with six Tier One gold mines. Not only that, but with several key projects finishing up next year, Barrick Gold’s stock looks to be a gold mining leader for years to come.
Bonus* Best Precious Metal Stocks – No. 1 Nucor (NYSE: NUE)
- Market Cap: 34.1B
- EPS: 7.20
- P/E: 16.58
Although steel isn’t generally considered a precious metal, Nucor is easily one of the top metal stocks to own. The company produces steel and steel products for a variety of uses, such as:
- Highway
- Agriculture
- Buildings
- Pipe
- Fasteners
- And Wire Products
With this in mind, Nucor is growing rapidly, with over 100% annual revenue growth in the last two quarters. Not only that, but the new infrastructure plan is focusing on rebuilding America. Consequently, the $1 trillion plan biggest investments include:
- $110 billion – Highways, Roads and Bridges.
- $66 billion – Railroads & Freight.
- $65 billion – Power Grid.
- $55 billion – Water & Waste.
- $39 billion – Public Transit.
- $25 billion – Airports.
Do you see a theme? All of these will use some sort of steel and steel products. That said, check out the best infrastructure stocks for more ideas.
Is Now the Time to Invest in Precious Metal Stocks?
Precious metal stocks are dropping right now, with investors not expecting too much to change in terms of FED policies.
With Powell getting reappointed to the FED chair, it looks like the tapering will continue, with interest rates set to rise next year. When this happens, growth stocks generally get hit the hardest as debt becomes more expensive.
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Keeping this in mind, precious metal stocks offer an excellent way to diversify your portfolio. With the assets dropping this past week, it could provide investors with the chance to invest before interest rates rise.
About Pete Johnson
Pete Johnson is an experienced financial writer and content creator who specializes in equity research and derivatives. He has over ten years of personal investing experience. Digging through 10-K forms and finding hidden gems is his favorite pastime. When Pete isn’t researching stocks or writing, you can find him enjoying the outdoors or working up a sweat exercising.