Gold is often considered to be a safe haven investment in uncertain times and a hedge against inflation. A report released by the World Gold Council (WGC) earlier this month revealed that gold outperformed other major assets, except for developed market stocks, in the first half of this year. Investors keen to gain exposure to gold can invest in physical gold, buy shares of gold mining, streaming, or royalty companies like Barrick Gold (GOLD), Franco-Nevada (FNV), and Osisko Gold Royalties (OR), or gold ETFs like SPDR Gold Shares (GLD).
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In its report, WGC noted that gold price increased 5.4% to $1,912.25/oz in the first half of the year. The organization cited a “relatively stable” U.S. dollar and interest rates, event risk hedging, and continued central bank demand as the reasons for the rise in gold prices.
WGC thinks that despite signs of cooling inflation, stock market volatility coupled with event risk (like geopolitical or financial crisis) will likely support hedging strategies, like gold. Bearing these views in mind, let us have a look at two gold stocks rated “Strong Buy” by Wall Street pros.
Barrick Gold (NYSE:GOLD)
Barrick Gold is one of the leading producers of gold and copper and boosts having the largest tier-one portfolio of gold and copper assets.
Last week, Barrick Gold announced its preliminary Q2 numbers. The company reported Q2 sales of 1.00 million ounces of gold and 101 million pounds of copper, with Q2 production coming in at 1.01 million ounces of gold and 107 million pounds of copper. In particular, gold production increased 6% on a quarter-over-quarter basis due to a return to normal throughput levels on the completion of maintenance work at its Carlin mine and higher grades derived at both Kibali in the Democratic Republic of Congo and Veladero in Argentina.
Barrick expects gold and copper production to increase through the year and said that it remains on track to achieve its full-year guidance.
Reacting to last week’s update, BMO Capital analyst Jackie Przybylowski said that the preliminary Q2 gold and copper production and sales volumes were roughly in line with her expectations. The analyst noted that the company’s directional guidance for Q2 unit costs marked an improvement compared to Q1 but was higher than expected.
Nonetheless, the analyst remains bullish on the stock and reiterated a Buy rating on GOLD with a price target of $27.
Is Barrick Gold Stock a Buy or Sell?
Wall Street’s Strong Buy consensus rating on Barrick Gold stock is based on nine Buys and one Hold. The average price target of $23.93 implies 38.5% upside potential. Shares are essentially flat on a year-to-date basis.
Osisko Gold Royalties
Osisko is an intermediate precious metal royalty company that holds a North American-focused portfolio of over 180 royalties, streams, and precious metal offtakes. Royalty companies provide financing to miners in exchange for a pre-defined share of production of a mining operation. Osisko’s cornerstone asset is a 5% net smelter return royalty on the Canadian Malartic mine, the largest gold mine in Canada.
Earlier this month, Osisko provided an update about its Q2 key metrics. Osisko earned about 24,645 attributable gold equivalent ounces (GEOs) in Q2, including 1,527 GEOs earned from the recently acquired CSA silver stream, for which revenues are expected to be recognized in Q3.
Reacting to the preliminary Q2 results, BMO Capital analyst Rene Cartier said that the GEO results were below his expectations. Consequently, he lowered his estimates. For the full year, Cartier continues to see Osisko tracking toward the mid-point of its previously issued outlook range. Cartier has a Hold rating on the stock with a price target of $24.
Is Osisko a Good Buy?
While Cartier is sidelined on the stock, three other Wall Street analysts have a Buy rating on Osisko Gold Royalties stock, bringing the consensus rating to a Strong Buy. The average price target of $19.97 implies about 35% upside. OR shares have outperformed several of its peers in the gold space, rising 23% year-to-date.
