Forget Silver: 5 Gold Stocks You Need To Know About

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Includes: ABX, AU, AUY, GG, NEM
by: Stock Croc

The price of gold has been increasing over the last two years and is now near its all time highs. While silver's been on the rise too, I think gold is a better long term bet. The primary catalyst for the increase in the price of gold has been the volatility in the stock market. Many investors have invested in gold in an effort to find a safe place to put their money. Over the last two years, with the exception of a brief market correction in September and October of 2011, gold stocks have benefitted from the higher gold prices and have been on the rise. Many gold stocks are close to their 52 week highs. Given the state of the world’s economies, the price of gold will probably remain high. With the increased interest in gold, now seems to be a good time to examine five widely traded large cap gold stocks, to see if they have a place in your portfolio.

Yamana Gold Inc. (NYSE:AUY) AUY has a market cap of $12.59 billion with a price to earnings ratio of 22.22. The stock has traded in a 52 week range between $10.88 and $17.47. The stock is currently trading around $17. The company reported 2010 revenues of $1.6 billion compared to revenues of $1.1 billion in 2009. Year 2010 net income was $440 million, compared to net income of $211 million in 2009.

One of AUY’s competitors is Kinross Gold Corporation (NYSE:KGC). KGC is currently trading around $14 with a market cap of $15.91 billion and a price to earnings ratio of 24.46. KGC pays a dividend which yields 0.9%, versus AUY whose dividend yields 1.3%.

AUY is a Canadian based company that mines for gold and other precious metals. The company benefitted from rising gold prices and increased its 2010 net income by 108% to $440 million. On November 2nd, the company reported third quarter revenues of $555 million, a 22% increase over revenues for the third quarter of 2010. The price of gold has continued to move up in 2011 and helped AUY to continue its amazing stock appreciation. AUY’s stock price is up by 213% over the last three years and 40% over the last 52 weeks. In the last month, the stock price has increased by 13%. The company has announced that its exploration efforts have been hugely successful, and that it expects its gold production to increase by 40% over the next three years. AUY has good forward momentum, and if the price of gold remains high, AUY could be an excellent investment. I rate AUY as a buy.

AngloGold Ashanti Ltd. (NYSE:AU) AU has a market cap of $93.45 billion with a price to earnings ratio of 99.26. The stock has traded in a 52 week range between $38.97 and $51.68. It is currently trading around $49. The company reported 2010 revenues of $5.3 billion compared to revenues of $3.7 billion in 2009. In 2010, net income was $112 million compared to net income of $-825 million in 2009.

One of AU’s competitors is the Eldorado Gold Corporation (NYSE:EGO). EGO is currently trading around $18 with a market cap of $10.03 billion and a price to earnings ratio of 37.90. EGO pays a dividend which yields 0.7% versus AU, whose dividend yields 0.5%.

AU is a South African company that engages in the exploration and production of gold. AU has benefitted mightily from the increase in gold prices. In 2010, the company increased its net income by $937 million. The company, which bases its dividend payout on cash flow, increased its 2011 dividend by 90%. The company’s stock performance has been mixed. The stock is up by 130% over the last three years, but down by 2.9 over the last 52 weeks. In the last month, the stock price has increased by 7%. The company’s third quarter revenues were up by around 24%, and its net income was up by around 650%. AU’s third quarter earnings report was extremely positive, and I expect that the company will continue to flourish in the future. I rate the stock as a buy.

Barrick Gold Corporation (NYSE:ABX) ABX has a market cap of $52.8 billion with a price to earnings ratio of 12.66. The stock has traded in a 52 week range between $42.50 and $55.95. The stock is currently trading around $53. The company reported 2010 revenues of $10.9 billion compared to revenues of $9.8 billion in 2009. Year 2010 net income was $3.2 billion compared to net income of $-4.27 billion in 2009.

One of ABX’s competitors is Gold Fields Ltd. (NYSE:GFI). GFI is currently trading around $17 with a market cap of a $12.36 billion and a price to earnings ratio of 44.16. GFI pays a dividend which yields 1.6% versus ABX whose dividend yields 1.1%.

ABX is a Canadian gold mining and exploration company. The company increased its 2010 net income by $7.47 billion. The company increased its year-over-year third quarter revenues by 34% and its net income by 37%. The company’s stock performance has been mediocre. The stock price is up by 98.6% over the last three years but down by 2.2% over the last 52 weeks. Over the last month, the stock price is up by 7%. ABX has done a good job of increasing its revenue growth and has strong margins (operating margin 46.49% / profit margin 31.05%). If the price of gold remains high, the company should be able to continue increasing its profits. I rate ABX as a buy.

Goldcorp Inc. (NYSE:GG) GG has a market cap of $43.33 billion with a price to earnings ratio of 27.19. The stock is trading in a 52 week range between $39.04 and $56.37. It is currently trading around $54. The company reported 2010 revenues of $3.7 billion compared to revenues of 2.7 billion in 2009. Year 2010 net income was $1.56 billion compared to net income of $238 million in 2009.

One of GG’s competitors is Randgold Resources Limited (NASDAQ:GOLD). GOLD is currently trading around $107 with a market cap of $9.78 billion and a price to earnings ratio of 34.42. GOLD pays a dividend which yields 0.2% versus GG, whose dividend yields 0.8%.

GG is a Canadian mining and exploration company. GG increased its 2010 revenues by 40% and its net income by 555%. The company’s stock has outperformed most other gold stocks, and is up by 119% over the last three years and up by 13.7% over the last 52 weeks. Over the last month, the stock price has increased by 9.3%. Investors seem to like GG’s earning performance, and during the last months price the stock price moved up with high trading volumes. If the price of gold remains strong, I believe that the stock price will continue upward. I rate GG as a buy.

Newmont Mining Corporation (NYSE:NEM) NEM has a market cap of $34.05 billion with a price to earnings ratio of 15.67. The stock has traded in a 52 week range between $50.05 and $72.42. It is currently trading around $68.81. The company reported third quarter revenues of $2.7 billion compared to revenues of $2.5 billion in the third quarter of 2010. Third quarter net income was $493 million compared to net income of $537 million in the third quarter of 2010.

One of NEM’s competitors is New Gold Inc. (NYSEMKT:NGD). NGD is currently trading around $11 with a market cap of $4.79 billion and a price to earnings ratio of 15.08. NGD does not pay a dividend versus NEM, whose dividend yields 2%.

NEM is a U.S. based company that engages in the exploration and mining of gold and copper. The company has also taken advantage of the rising price of gold, and in 2010, it increased its year-over-year revenues by 23% and its net income by 77%. The company’s stock price has performed admirably and is up by 10.6% over the last 52 weeks and 163% over the last three years. The stock price has increased by 4.8% over the last month. NEM management believes that the company will be able to continue generating strong free cash flow, and has increased its dividend three times by 300% since September of 2010. The company’s current dividend of $1.40 with a 2% yield is the highest in the gold industry. The company also has a strong balance sheet, which boasts over $2 billion in cash. I believe that NEM will continue to be a leading gold mining company, and I rate the stock as a buy.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.