We recently published a list of 6 Most Profitable Gold Stocks To Buy Now. In this article, we are going to look at where Wheaton Precious Metals Corp. (NYSE:WPM) stands against other most profitable gold stocks to buy now.
Gold futures experienced a significant uptick on December 10, marking the highest close in more than two weeks. This movement was primarily driven by China’s central bank, the People’s Bank of China (PBOC), which resumed gold purchases for the first time in six months, alongside the Chinese government’s commitment to implementing a “moderately loose” monetary policy and a more proactive fiscal stance in the coming year. ETFs tracking as gold, such as the SPDR Gold Trust (GLD), VanEck Vectors Gold Miners ETF (GDX), VanEck Vectors Junior Gold Miners ETF (GDXJ), iShares Gold Trust (IAU), and iShares Silver Trust (SLV), among others, have also seen increased activity in response to the market movements.
The PBOC’s acquisition of approximately five metric tons of gold in November, which is modest compared to previous purchases that sometimes reached 30 tons per month, was a critical factor in the recent gold rally. Analysts at Commerzbank noted that the resumption of gold buying by the PBOC could be a strategic response to the election of Donald Trump, who has threatened to impose tariffs on China. Additionally, the recent dip in gold prices after a series of record highs may have sparked renewed interest in the precious metal. For gold prices to maintain and potentially extend their gains, it is essential that central bank purchases continue in the coming months, Commerzbank analysts emphasized. Another factor supporting the rise in gold prices is the growing expectation among traders that the Federal Reserve will cut U.S. interest rates at its upcoming meeting. According to ActivTrades analyst Ricardo Evangelista, a rate cut would enhance the appeal of non-interest-bearing assets such as gold.
Gold’s Bull Market Expected to Continue
In an interview with CNBC on December 10, Max Layton, Global Head of Commodities Research at Citi, discussed the impressive performance of gold in the current year and its potential outlook for 2025. Layton noted that this year has been exceptionally strong for gold, with a significant bull market that can be observed over a 50-year chart. He expressed confidence that this trend is likely to continue, citing several key factors.
Citi’s analysts have introduced a fundamental physical flows-based framework for gold pricing, which provides insight into the underlying drivers of the bull market. These drivers include substantial investment from central banks and wealthy over-the-counter (OTC) investors, as well as broader investor concerns about high interest rates and high debt levels in the United States. Additionally, investors are using gold as a hedge against the potential medium-term impact of a U.S. economic slowdown, which has been ongoing for the past two and a half years. The labor market has also been slowing down during this period, and real interest rates remain at 15-year highs, further fueling these concerns. Layton emphasized that as long as these economic issues persist, there will be continued investment in gold as a hedge.
Gold has been shining as a robust investment, driven by renewed buying from central banks, and growing expectations of a U.S. Federal Reserve interest rate cut.
Our Methodology
To compile our list of the 6 most profitable gold stocks to buy now, we used Finviz and Yahoo stock screeners to find the companies that are involved in the production, extraction, processing, or sale of gold. We shortlisted companies with a positive 5-year net income compound annual growth rate (CAGR) and a positive net income in the trailing twelve months (TTM) as informed by SeekingAlpha. Then we used Insider Monkey’s Hedge Fund database to rank 6 stocks according to the largest number of hedge fund holders, as of Q3 2024. The list is sorted in ascending order of hedge fund sentiment.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Wheaton Precious Metals Corp. (NYSE:WPM)
Number of Hedge Fund Investors: 23
5-Year Net Income CAGR: 108.56%
TTM Net Income: $609.4 Million
Wheaton Precious Metals Corp. (NYSE:WPM) is a leading precious metals streaming company, known for its robust portfolio of long-life, low-cost assets. The streaming model allows the company to purchase a percentage of the metals produced by a mine, for an upfront payment plus an additional payment when the metal is delivered.
Wheaton Precious Metals Corp. (NYSE:WPM) is focusing on growing its portfolio through strategic partnerships and accretive transactions. In Q3, the company announced the expansion to the existing stream on Rio2’s Phoenix project, with an additional investment of $100 million, and the new $625 million gold stream on Montage’s Kona project, located in Cote d’Ivoire, is one of the highest-quality gold projects on the continent, with a long 16-year mine life. On December 5, Wheaton Precious Metals Corp. (NYSE:WPM) also secured a $175 million streaming deal with Allied Gold for the Kurmuk project in Ethiopia. This agreement involves the company paying upfront cash in four equal installments during the construction phase. In return, Wheaton Precious Metals Corp. (NYSE:WPM) will receive 6.7% of the payable gold until a total of 220,000 ounces have been delivered. After this threshold, the company will buy 4.8% of the payable gold for the remainder of the project’s life. This deal will add 180,000 ounces of proven and probable mineral gold reserves, 30,000 ounces of measured and indicated mineral gold resources, and 20,000 ounces of inferred gold resources to the company’s portfolio.
The company is also investing in several development projects that are expected to produce gold in the coming years. These include Blackwater, Goose, PlatReef, and Mineral Park, all of which are expected to be operational within the next 12 months. The development of these projects is forecast to increase the company’s gold production at an industry-leading rate of approximately 40% to over 800,000 ounces by 2028. This growth trajectory is supported by the company’s strong balance sheet, with approximately $700 million in cash and a $2 billion revolving credit facility, which provides the financial flexibility to fund all outstanding commitments and pursue additional opportunities.
Overall, WPM ranks 3rd on our list of one of the most profitable gold stocks to buy now. While we acknowledge the potential of WPM to grow, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than WPM but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.