2 Falling TSX Gold Stocks I’d Buy to Fight Recession Worries
Image source: Getty Images
Over the past few months, the stock market has seen a wild move on growing investor fears of an impending recession amid inflationary pressures. This is one of the main reasons why the central banks of Canada and the United States have recently begun to take aggressive measures to fight inflation and reduce the amount of money in the economy. As the possibility of a recession continues to haunt investors, gold prices could soar as investors flee riskier assets.
Higher gold prices tend to increase the profitability of gold miners and trigger a rally in their stocks. That’s why it makes sense for investors to keep fundamentally strong gold stocks in their portfolios during these uncertain economic times.
In this article, I will highlight two of the best gold stocks on the TSX that you can consider buying now. Interestingly, both of these stocks have recently undergone a correction, which makes them more attractive.
OceanaStock of gold
OceanaGold (TSX:OGC) is a multinational gold producer headquartered in Melbourne with a market capitalization of approximately $1.5 billion. Although it has consistently exceeded analysts’ earnings estimates for the past two quarters, its TSX-listed stock has seen a sharp correction lately. The stock now trades at $2.09 per share with losses of 6% since the start of the year after losing more than 11% of its value in August alone.
In the first half of 2022, OceanaGold’s gold production jumped 39% on an annual basis (year-over-year). During the June quarter, its total revenue increased 25.6% from a year ago to US$229.4 million on gold production of 112,296 ounces. Consequently, the company registered a 25% year-on-year jump in its second-quarter (Q2) adjusted earnings to $0.05 per share, beating analyst estimates.
In July, OceanaGold increased its copper production forecast to 14,000 tonnes from its original forecast of 12,000 tonnes while maintaining its gold production forecast range of 445,000 to 495,000 ounces. In addition to its strong fundamentals, recession fears are fueling expectations of a strong recovery in gold prices, which should help OceanaGold stock rally in the coming months.
Barrick Gold Stock
Barrick Gold (TSX:ABX)(NYSE:GOLD) could be another quality gold stock to buy in Canada right now that has seen a correction lately. After posting 27.5% gains in the first quarter, ABX stock has lost nearly 30% of its value since then. With that, shares of this Toronto-based gold and copper producer are now trading at $21.65 per share with losses of around 11.3% year-to-date.
In the second quarter, the company’s gold production improved on a sequential basis to 1.04 million ounces, and it expects production to increase further in the second half of the year. Overall, strong operational performance at its mines keeps Barrick Gold on track to meet its full-year production targets.
While a recent decline in gold and copper prices could reduce its profitability in the current quarter, the overall long-term demand outlook for these metals remains strong, with stronger global demand in the post-pandemic era. This is one of the main reasons why I find ABX stocks worth considering for the long term. Furthermore, this Canadian gold stock also has a decent dividend yield of around 2.4% right now.