Invest in These 2 Top Gold Stocks for TFSA Portfolio Diversification

Kirkland Lake Mining Ltd. (TSX:KL) (NYSE:KL) and SSR Mining Inc. (TSX:SSRM) (NASDAQ:SSRM) have rallied on strengthening financials and top notch operating performance, and are top gold stocks to add to a TFSA portfolio for diversification.

| More on:

In a well-diversified portfolio, investors should hold some gold stocks, as these stocks act as a buffer with little correlation to the rest of the market. They rally when the U.S. dollar weakens, when there is a lot of uncertainty in the market, and when investors are looking for a “safe haven” in their portfolios.

Strong U.S. economic data, a strong US dollar, and a return of investor optimism has put a damper on gold prices recently.

When interest rates rise, the U.S. dollar appreciates, and gold, as a consequence, falls. So we are left with this set of data points that are difficult to forecast.

But investing in gold stocks for portfolio diversification is a good bet to ensure stability of returns for your investment portfolio.

Here are two gold stocks that are trading at or near 52-week highs, as they have been rallying of late due to strong company-specific performance, as well as macro forces and expectations for the gold price.

Kirkland Lake Gold (TSX:KL)(NYSE:KL)

$7.4 billion Kirkland Gold is achieving production momentum, as it surpasses 2018 production targets and achieves a 21% increase. Couple this with strong free cash flows driven by rapidly declining costs and we have a real business for investors to invest in for gold exposure.

In fact, the company has been free cash flow positive for five years now, with free cash flow of $165 million in 2017, a more than 50% increase from 2016.

With mines in Canada and Australia, Kirkland also represents a lower-risk way to play the gold space.

This is a high-quality stock that has shown operational excellence and that can be expected to continue to see strong production growth, decreasing costs, and a rising dividend.

With its rising free cash flows, investors can expect further dividend increases.

SSR Mining Inc. (TSX:SSRM)(NASDAQ:SSRM)

$2 billion SSR Mining is still attractively valued, as the company remains a top notch performer with rapidly growing cash flow and production.

SSRM has had an impressive performance in the last few years, with strong cash flow generation and strong cost performance.

2017 free cash flow was $111 million, and while in 2018 spending has accelerated to fund future growth, the company remains very well positioned to benefit from rising gold prices.

With a track record of beating expectations, industry leading margins and returns, a healthy balance sheet with $475 million in cash and a debt to total capitalization ratio of just 20 times, the shares are a good buy for investors seeking exposure to a jackpot of gold.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Karen Thomas has no position in any of the stocks mentioned.

More on Metals and Mining Stocks

todder holds a gold bar
Metals and Mining Stocks

Canadian Mining Stocks: Buy, Sell or Hold?

Investing in quality gold mining stocks that trade at a reasonable valuation could help you beat the TSX index over…

Read more »

People walk into a dark underground mine.
Metals and Mining Stocks

Is First Quantum Minerals Stock a Buy?

Let's dive into whether First Quantum Minerals (TSX:FM) is worth buying at current levels, or if investors should sit this…

Read more »

nugget gold
Metals and Mining Stocks

Competitive? Beat the Market With These 2 Dividend-Paying Growth Gems

Investors looking to beat the market buying dividend stocks right now need to focus on this right sectors. Here are…

Read more »

nugget gold
Metals and Mining Stocks

A Canadian Billionaire Investor Sold Micron Stock and Bought This TSX Company Instead

Prem Watsa focuses on value over short-term growth.

Read more »

Concept of multiple streams of income
Metals and Mining Stocks

Is Franco-Nevada Stock a Buy for Its 1.2% Dividend Yield?

Gold royalty stocks represent a niche in the precious metals industry. They have different dynamics from mining stocks.

Read more »

todder holds a gold bar
Metals and Mining Stocks

The 1 Mining Stock Canadians Should Buy and Hold Forever

Newmont is a gold mining stock that trades at a cheap valuation, making it a top investment choice for those…

Read more »

Metals and Mining Stocks

Top Canadian Gold Stocks to Buy Now

Canadian gold mining stocks such as Barrick Gold and Kinross Gold are two top investments in October 2024.

Read more »

todder holds a gold bar
Stocks for Beginners

Is the Worst Over for SSR Mining Stock?

SRR Mining stock has been rising higher after recent earnings performance that made a bit of a comeback. So is…

Read more »