3 Gold and Silver Stocks to Buy for a Not-So-Shiny Market

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  • Financial and economic uncertainty coupled with the ongoing war in Ukraine has provided gold and silver stocks with upside momentum.
  • Barrick Gold (GOLD): New and expanded dig sites in Pakistan and the Dominican Republic provide significant potential growth.
  • Hecla Mining (HL): Record-breaking silver production combined with 15 potential future mining operations in the pipeline provides a strong long-term investment opportunity.
  • Newmont (NEM): Newly approved acquisitions of properties in Canada and South America should lead to additional long-term revenue growth.

Source: VladKK / Shutterstock

Gold and silver stocks have had a choppy picture in recent weeks. Earlier in April, the continued war in Ukraine sent investors scurrying to snap up gold and silver at a record pace. However, China, one the largest consumers of these metals, continues to impose lockdowns on Shanghai and Beijing, constraining demand for both.

When investors look for a safe haven investments, gold typically tops the list. Given the geopolitical uncertainty in Eastern Europe, the precious metal has surged higher. For example, the Philadelphia Gold and Silver Index is up around 6% year-to-date (YTD)However, it has lost roughly 15% from the multi-year record on Apr. 18.

Meanwhile, the price of gold is up almost 5% in the past year, while the price of silver is down roughly 4%. Historically, gold and silver prices tend to fall when interest rates are rising. With the Federal Reserve signaling its intent to increase interest rates more if necessary, investors now wonder what may be next for the precious metals, especially given the war in Ukraine.

With that in mind, here are three of the best gold and silver stocks to buy in May:

GOLD Barrick Gold Corporation $21.29
HL Hecla Mining Company $4.36
NEM Newmont Corporation $68.27

Gold and Silver Stocks to Buy: Barrick Gold (GOLD)

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My first pick for today is Barrick Gold (NYSE:GOLD), a leading gold and copper miner with mines in 18 countries across four continents. These include the Nevada Gold Mines complex, the largest in the world, which produces some 3 million ounces of gold per year.

In mid-February, Barrick released fourth quarter (Q4) fiscal-year 2021 (FY21) results. Revenue came in at $1.4 billion, compared with $1.6 billion a year ago. Net income was $626 million, up slightly from $616 million last year. Diluted earnings per share (EPS) was 35 cents, the same as the previous year. Free cash flow came in at $718 million, down from $1.1 billion in the prior-year quarter.

Management recently announced a partnership with the government of Pakistan to begin development on Reko Diq, one of the world’s largest copper and gold deposits. Additionally, the company has completed the review of its proposed expansion of the Pueblo Viejo complex in the Dominican Republic, which will extend the mine’s life until 2040.

GOLD stock has gained roughly 14% YTD and generates a dividend yield of 1.88%. Shares are trading at 18.96 times forward earnings and 3.31 times trailing sales. Meanwhile, the 12-month median forecast stands at $28.50.

Hecla Mining (HL)

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Next up on today’s list is Hecla Mining (NYSE:HL), the largest silver mining company stateside. Hecla’s history goes back to 1891 and management currently operates two silver mines and one gold mine.

Hecla issued Q4 FY21 results on Feb. 22. Revenue came in at $185 million, down from $188 million a year ago. Net income rose slightly to $58.2 million compared to $57.7 million in the prior-year quarter. Diluted EPS came in at 2 cents, up from 1 cent a year ago. Free cash flow was $24.5 million.

The company has two mines in predevelopment stages with 13 additional mines in the exploration stage. The most recent exploration report detailed a total of 11 properties with promising signs of precious metals.

HL stock is down around 12% YTD. Additionally, it generates a dividend yield of 0.55%. Shares are trading at 55 times forward earnings and 3.5 times trailing sales. At present, the 12-month median forecast stands at $6.75.     

Gold and Silver Stocks to Buy: Newmont (NEM)

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The final stock for today is Newmont (NYSE:NEM), the world’s largest producer of gold with additional interests in copper, silver, zinc and lead. The mining giant has a total of 14 operating mines in North America, South America, Australia and Africa.

Newmont announced Q1 results on Apr. 22. Revenue came in at $3 billion. Net income was $1.4 billion, virtually unchanged from last year. Diluted EPS was 69 cents, up from 67 cents the year before. Free cash flow was $252 million.

Management recently announced progress in two new mining locations in British Columbia and Yukon. It will also buy the remaining stake in the Yanacocha mine in Peru, where it had acquired a 43.65% interest in February. This deal sets Newmont up for planned expansion of the massive mine and to begin extracting significant amounts of copper from the mine, as well as gold.

NEM stock has appreciated around 11.8% YTD and brings in a dividend yield of 3.22%. Shares are trading at 17.7 times forward earnings and 4.7 times trailing sales. Finally, the 12-month median forecast stands at $80.   

On the date of publication, Tezcan Gecgil 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.

Tezcan Gecgil has worked in investment management for over two decades in the U.S. and U.K. In addition to formal higher education in the field, she has also completed all 3 levels of the Chartered Market Technician (CMT) examination. Her passion is for options trading based on technical analysis of fundamentally strong companies. She especially enjoys setting up weekly covered calls for income generation.

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