St. Patrick's Day Sale
Stock market investing is an excellent way to put your money to work for you to make more money. By investing in the right companies, you can gain exposure to the success of various sectors without getting directly involved. Investing in the mining industry is always a terrific way to gain exposure to the commodities market.
Investing in commodities like gold and other precious metals is a good way for investors to protect their capital during turbulent market conditions. Safe-haven assets like gold appreciate in value when broader markets are volatile, giving opportunities to savvier investors to reallocate their portfolios and position them for growth.
As of this writing, the S&P/TSX Composite Index is down by 8.61% from its 52-week high. The weakness in the Canadian benchmark index means it might be a good time to invest in precious metals and publicly traded companies that deal with them. To this end, I will discuss two of the top precious metals stocks you can consider adding to your portfolio today.
Barrick Gold
If you want exposure to rising gold prices, investing in mining stocks like Barrick Gold (TSX:ABX) can be an excellent strategy. The $39.80 billion market capitalization mining company specializes in producing gold and copper. Operating 16 sites in 13 countries worldwide, the Toronto-based mining company is the top pick for many investors looking for gold exposure.
The company is well-run, benefits from rising gold prices due to improved margins, and does not operate in unstable jurisdictions. These factors significantly reduce the risks it faces in operations compared to many industry peers. That said, Barrick Gold has only grown its free cash flow by just 18% in the last five years. The economic turmoil can benefit the company and increase shareholder value if it persists.
As of this writing, Barrick Gold stock trades for $22.67 per share. Down by 19.58% from its 52-week high, it offers its shareholders their payouts at a 2.39% dividend yield.
Wheaton Precious Metals
Wheaton Precious Metals (TSX:WPM) offers you another way to gain exposure to the precious metals segment. Unlike Barrick Gold, Wheaton Precious Metals is not a gold mining company.
Instead, it operates as a royalty company offering capital to gold miners in exchange for purchasing the mined product at lower prices in the future. Once it acquires the commodity at lower rates, the company sells it at a profit. With the profit, it then funds additional mining operations, generating more profits.
The Vancouver-based $27.02 billion market capitalization company has fewer assets, primarily operating as a financial partner.
This business model significantly reduces the risk to itself while enjoying substantial profits when precious metals like gold and silver perform well. Over the last decade, Wheaton Precious Metals stock has returned 151% in dividend-adjusted gains to its investors.
As of this writing, Wheaton Precious Metals stock trades for $59.68 per share. Down by 16.40% from its 52-week high, it pays its shareholders their payouts at a 1.37% dividend yield.
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Foolish takeaway
Typically, gold prices and interest rates have an inverse relationship. When interest rates rise, gold prices go through pullbacks.
However, the last year has seen gold prices gain momentum, despite a meteoric rise in interest rates. Investing in stocks that benefit from rising gold prices can be a great way to protect your portfolio from the harsh market environment.
Priced at 15.29 times forward earnings, Barrick Gold stock seems the more attractively priced of the two. While seemingly expensive at 32.15 times forward earnings, Wheaton Precious Metals stock also has the potential to surge significantly in the coming weeks. If I were to choose between the two, I would take Barrick Gold stock as my top pick.
