Gold prices continued reaching all-time highs. The record on March 22 was attributed to the aftermath of the Fed’s recent policy decision. Financial markets anticipate interest rates will decline throughout the year, exerting typical upward pressure on gold prices. Several additional factors contribute to the expectation that gold prices will continue rising. Some of those are central bank purchases of gold, geopolitical uncertainties, and persistently high inflation.
Goldman Sachs (NYSE:GS) analysts believe gold prices will increase over the next twelve months. Furthermore, Akin Investment suggests gold prices could rise to approximately $2,400 per ounce over the following two years. However, characteristics making gold a stable investment may also mean it offers less potential for capitalizing on gains than other options: gold provides stability during uncertain times but typically appreciates less than equities and does not generate income from dividends.
Based on past trends, analysts believe gold mining companies can outperform physical gold prices, and there are several candidate stocks to buy. Historically, when gold miners’ stock prices lag behind rising gold prices, the miners subsequently outperform the commodity. With gold achieving record highs recently, the divergence in performance between gold and mining stocks is one of the widest in decades. Therefore, mining company share prices have substantial room to increase to align with gold prices that have recently moved up, potentially delivering outsized returns for investors seeking some stocks to buy as gold shines.
Several gold companies offer compelling valuations as gold prices increase, with three stocks to buy presenting compelling reasons to outshine the precious metal.
Sandstorm Gold (SAND)
One of the stocks to buy as gold prices are high is Sandstorm Gold (NYSE:SAND), a gold royalty and streaming company indirectly involved in mining operations. It generates revenue by acquiring royalties on mining assets operated by other companies.
Sandstorm has built a portfolio of over250 royalty interests on mining projects worldwide. This business model allows the firm to benefit from rising gold prices without incurring the operational costs associated with mining. Under its royalty agreements, Sandstorm has the right toschedule gold production over the coming year totaling approximately 75,000 to 90,000 ounces. This entitlement is expected to grow to over 125,000 ounces annually over the next five years as more mining projects in its portfolio reach commercial production.
SAND offers shareholders a competitive dividend yield of approximately 1.2% based on current payouts and share price. Analysts have an average12-month target price of $7.36 for the stock, representing a potential upside of over 40% from current trading levels. The forecast growth, low-cost business model, and production growth profile make the company well-positioned to deliver attractive returns for investors.
Coeur Mining (CDE)
Coeur Mining (NYSE:CDE) is the second of the three stocks to buy as gold prices rise. It presents an interesting opportunity for investors in gold mining companies actively engaged in production. Headquartered in the United States, Coeur owns and operates four precious metals mines globally – three located domestically and one in Mexico. Production is ramping up across all operations to maximize output.
While CDE share prices have declined recently following an earnings miss, the company’s long-term potential remains intact. It issued additional stock to fund expansion efforts to grow its proven gold reserves, estimated at over 3.2 million ounces. Full-year 2024 guidance projects gold production in 310,000-355,000 ounces.
Importantly, Coeur expects to reach design capacities at its mines this year. Once achieved, capital expenditures are forecasted to decrease. This could enable the business to generate net profits as precious gold prices hold steady.
Most analyst firms following Coeur support it as one of the stocks to buy. Their price targets suggest meaningful upside potential exists, with shares possibly reaching $3.75 in the near term based on Coeur’s operational execution and balance sheet management. Overall, the company shows promise for investors seeking leverage to higher gold prices through established mining operations.
Newmont (NEM)
Newmont (NYSE:NEM) is the last one of the stocks to buy. It presents an intriguing opportunity for investors seeking stocks that may provide the stability often associated with gold prices. As one of the largest and most diversified active mining companies worldwide, Newmont offers investors significant geographic diversification.
The company has been actively growing its reserve base through strategic acquisitions such as the high-profile Newcrest Mining acquisition. This transaction enabled Newmont to increase its gold reserves by 41% to 135.9 million ounces. While developing its reserves required significant expenditure, causing the company to report a net loss last year, Newmont expects to benefit from this investment by the end of next year.
Analysts covering Newmont appear especially optimistic about the company’s future prospects, evidenced by their average 12-month target price of $54.77. This represents a potential upside of approximately 55% from current levels. Newmont’s diversified portfolio of long-life assets and ongoing efforts to replenish its reserves through accretive Mergers and Acquisitions (M&A) provide a compelling case for the stock as a way for investors to access gold-related exposure through corporate equity.
On the date of publication, Stavros Tousios did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.