For those anticipating a mania in gold mining stocks -- and I count myself in that group -- Goldcorp (GG) is an essential part of such a portfolio, especially at its current prices. Consider the rationale:
1. With a market capitalization of greater than $36 billion at the time of this writing, as well as and EPS of 2.26 and a low beta of just 0.53, Goldcorp meets the criteria of being a stable, major producer. For those who are sensitive to the volatility of gold mining stocks but still want to participate in them cautiously -- and I would argue that a well-rounded mining portfolio will have some exposure to such rationale -- Goldcorp is a great fit. Its financials and its operations establish it as a "blue chip" gold stock, and thus a safe bet for those who do not want to dig too deep into stock picking but rather want to ride the euphoria anticipated to come to the mining sector.
2. The company's cost per ounce for Q3 2011 was reported to be $258 -- outstanding in comparison to many of its peers, who report numbers nearly twice that amount; in fact, a study conducted by Forbes showed that average cost per ounce for gold miners 2009 was $450, and rising. Such favorable production costs suggest Goldcorp will be able to maintain profitability -- even if gold prices were to continue falling. The company is currently issuing a dividend of $0.05 per share, which amounts currently to a yield of 1.20%. In light of its production costs, I suspect these numbers are easy to maintain and have much room to grow if the gold price appreciates significantly, which I suspect it will. For those looking for stocks with the potential to yield a nice dividend over the course of a bull market with years left to go, Goldcorp's current position looks quite favorable.
3. In terms of its current price, Goldcorp seems to be especially worth buying. Its current P/E ratio, still a metric I am always quick to look at, is just under 20; for a major producer in a growing sector, I find this to be acceptable. Of course, a fall of about 9% to its 200 week moving average just above $40 would be even better, and I would feel especially comfortable adding to my position at those prices.
Disclosure: I am long GG.