Author: Taylor Dart

2 Gold Stocks To Add To Your Watchlist

Posted on by Taylor Dart

2023 has been a great year for investors thus far, with several asset classes enjoying double-digit year-to-date percentage gains, including the Nasdaq 100 Index (QQQ).

While it may be lagging short-term after a strong November and December, the strongest performance has come from the Gold Miners Index (GDX), which outperformed the Nasdaq 100 by more than 3500 basis points in 2022, and is up 46% off its Q3 2022 lows.

Following this strong rally in the GDX and a surge in optimism among investors, some consolidation or a deeper pullback would not be surprising.

However, it’s worth building a watchlist of undervalued now to prepare for sharp pullbacks, assuming these stocks retreat into a low-risk buy zone.

In this update, we’ll look at two gold names still trading at deep discounts to fair value and highlight their low-risk buy zones:

Argonaut Gold (ARNGF)

Argonaut Gold (ARNGF) is a gold producer with a market cap of $430 million and was a name I highlighted in November as one to keep a very close eye on, and I stated the following:

To summarize, this pullback in the stock has provided a fire sale, and I don’t recall the last time I saw sentiment this bad for a producer in years.

Since that update, the stock has soared by more than 60% and is one of the top-performing gold producers by a wide margin.

This is partially attributed to the strong recovery in the gold price that has placed a relentless bid on gold miners but also due to several positive developments.

The major one worth discussing is the appointment of a new Chief Executive Officer, Richard Young, who is well known for transforming Teranga Gold from a junior producer into a $2.0 billion miner before its eventual takeover in late 2020. Continue reading "2 Gold Stocks To Add To Your Watchlist" →

Two Dividend Payers In Low-Risk Buy Zones

Posted on by Taylor Dart

It’s been a solid month for the market, with the S&P 500 (SPY) up 6% in January and another 1% to start February. However, the real winners have been growth stocks, with the Russell 1000 Growth Index Fund (IWF) up 10% year-to-date.

This broad-based rally has made it more difficult to find names trading at deep discounts to fair value, but there are still a few names that continue to look attractive, especially if one is looking to battle-harden and diversify their portfolio with high yields.

Given the violent pullback in natural gas prices and some disappointing company-specific news this week, TC Energy (TRP) and National Fuel Gas Company (NFG) have found themselves sitting near 52-week lows, placing them in a relatively low-risk buy zone to start new positions. Let’s take a closer look below:

TC Energy (TRP)

TC Energy is one of the largest North American energy companies. It is best known as the owner of the Keystone XL Pipeline (~2,900 miles) that transports Canadian/US crude oil supplies across North America and the ANR Pipeline, one of the largest interstate natural gas pipeline systems (~9,200 miles) in the US.

The company was founded in 1951 and continues to have one of the best dividend track records among its peers, consistently paying and growing its dividend over the past 22 years, from $0.80 in FY2022 to $3.60 in FY2022.

Unfortunately, while it is a steady dividend and earnings grower that has continued to diversify with a focus on adding renewables over the past few years, it has had a rough past year from an inflationary standpoint.

This is evidenced by the company having to raise the cost estimate for its Coastal GasLink Project in Western Canada to ~$11.0 billion, impacting its FY2023 capital spending outlook, which has come after already reporting a doubling of the initial cost estimate to ~$7.0+ billion six months ago.

The continued cost increases can be attributed to construction delays due to COVID-19 disruptions and protests, combined with higher costs for materials. Continue reading "Two Dividend Payers In Low-Risk Buy Zones" →

Get Exposure To Gold With These 2 Leaders

Posted on by Taylor Dart

While 2022 was a year to forget for the major market averages, the Gold Miners Index (GDX) managed to claw its way back from significant underperformance to finish the year down just 10%, outperforming the S&P 500 (SPY) by 1000 basis points.

Fortunately for investors in the gold space, we’ve seen follow-through to this outperformance to start the new year, with the GDX up 13% year-to-date and back into positive territory on a 1-year trailing basis.

However, while the index may be up sharply off its lows and gold miners are outperforming most stocks, this doesn’t mean that any miner can be bought on dips, and a few have become expensive and increasingly risky now that they’re up more than 50% off their Q3 2022 lows.

In this update, we’ll look at two names that continue to fire on all cylinders and are much safer ways to buy any upcoming pullbacks in the space, given their operational excellence, attractive dividend yields, and superior diversification vs. their peer group.

Let’s take a closer look below:

Agnico Eagle Mines (AEM)

Agnico Eagle Mines (AEM) is the world’s third-largest gold producer and has been one of the busiest companies in the sector from an M&A standpoint.

In Q1 2022, the company closed its merger with the 9th largest gold producer globally, Kirkland Lake Gold, and is now in the process of acquiring Yamana Gold’s Canadian assets in a two-way acquisition with Pan American Silver (PAAS).

The result of these two acquisitions is that the company will grow into a ~3.9 million-ounce producer by 2024 (assuming the Yamana deal closes), placing it just behind Barrick Gold (GOLD) for the #2 spot among the world’s largest gold miners.

The result of this M&A activity is that Agnico Eagle now has ten mines in the safest mining jurisdictions globally (up from seven previously) and will gain the other 50% ownership of one of its largest gold mines in Quebec if the Yamana deal closes. Continue reading "Get Exposure To Gold With These 2 Leaders" →

2 Tech Stocks That Have Finally Bottomed

Posted on by Taylor Dart

2022 was a year to forget for investors and one of the worst years in history for the 60/40 stock/bond portfolio strategy in history.

This was evidenced by both assets posting double-digit declines, with the S&P 500 (SPY) actually performing the best with a 20% decline for the year, which says a lot about the magnitude of the decline in bonds.

Fortunately, 2023 is off to a better start, and while the S&P 500 entered the year in rough shape, the Nasdaq Composite was over 30%, with sentiment for the tech sector arguably the worst it’s been in nearly a decade.

This has set up some oversold buying opportunities, and some tech names have ~65% of their value, placing them in an interesting position from a valuation standpoint.

In this update, we’ll look at two tech stocks that look to have finally bottomed and where investors could find some value in buying the dip.

Crowdstrike (CRWD)

Crowdstrike (CRWD) is a $24 billion company in the cybersecurity space, and it continues to be one of the fastest-growing companies globally, increasing annual revenue from $119 million in FY2018 to $1.45 billion in FY2022, and sales estimates are sitting at $3.8 billion for FY2025.

The company is currently the market leader in endpoint security. Its flagship product is the Falcon Platform, with continuous AI analytics on trillions of signals helping to defend the thousands of customers on its platform.

As of the company’s most recent quarter, it has 15 of the top 20 US banks on its platform, 537 of the Global 2000 companies, and 21,100 customers in total.

Notably, the company is certainly not seeing a slowdown in line with other S&P 500 companies in this recessionary environment, growing customers by 44% year-over-year and revenue by 53% to $580.9 million.

The result is that Crowdstrike is set to grow annual EPS yet again this year by a market-leading 130%, with annual EPS estimates sitting at $1.54, up from $0.67 last year. This growth is expected to continue in FY2024, with annual EPS set to come in at $2.02. Continue reading "2 Tech Stocks That Have Finally Bottomed" →

2 Retail Names With Higher Prices Ahead

Posted on by Taylor Dart

We’ve seen a better start to the year for the major market averages, with the S&P 500 (SPY) up over 3% year-to-date and the Nasdaq Composite enjoying an even more impressive 4.5% return.

While some of these gains could be whittled away if we see a disappointing CPI report with higher-than-expected inflation, this is certainly a welcome departure from last year’s mess, with both indexes down over 20% for the first time since 2008.

Unfortunately, not all stocks have participated, and one sector that continues to remain in the doghouse from a sentiment standpoint is the Retail Sector.

Within the sector, the restaurant group has outperformed on hopes of peak inflation and improving demand (lower gas prices), but other retail brands like Chico’s FAS (CHS), with the stock being one of the worst performers year-to-date.

While this is partially attributed to the company’s softer holiday sales numbers, the sell-off is starting to look overdone, and a lot looks priced in here, with the stock trading at a mid-single-digit PE ratio.

Meanwhile, within the restaurant space, Wingstop (WING) may be an outperformer but it is positioned to continue its outperformance with aggressive unit growth and deflation in its core commodity (bone-in chicken wings).

This allowed it to price less aggressively than peers and capture market share despite a challenging backdrop where traffic growth has been elusive, especially while gas prices are hovering above $4.00/gallon.

Let’s take a closer look at both names below:

Wingstop (WING)

Wingstop (WING) began as a small buffalo-style chicken wing restaurant in Texas and has since grown to 1,800+ restaurants, with more than 95% of its system being franchised.

Since going public, the company has outperformed nearly all other restaurant stocks with a 640% return in just seven years. Continue reading "2 Retail Names With Higher Prices Ahead" →