There’s nothing wrong with holding a portfolio consisting of boring stocks. You know, the kind of steady blue-chip stocks that don’t necessarily perform as well in a bull market but hold steady in a bear market?
In recent years, surges in key market growth areas led many investors to avoid boring stocks like the plague. Why buy shares in a company with low momentum when everything is flying?
Well, as we’ve seen with this recent downturn, there’s significant value in holding defensive companies. The excitement investors receive from owning high-momentum stocks is great during hyper bull markets. But in downturns, safe havens are where capital tends to rush.
Accordingly, given the deteriorating macro environment we find ourselves in, boring may be more exciting than ever. Here are three boring stocks worth considering for those seeking profit over the next 12 months. Notably, these three companies are all unique ways to play gold – one of the most defensive asset classes I think is worth considering in what could be a declining dollar environment underpinned by weak macro fundamentals.
Gold Fields (GFI)
One company I’ve discussed in the past, which I’m growing increasingly bullish on, is Gold Fields (NYSE:GFI). This Toronto-based gold miner has announced the acquisition of Yamana Gold in a deal worth roughly $6.7 million. Recently, the company distributed a notice of a general meeting attributed to this deal, suggesting this deal could be completed in short order.
While this deal is a win for both companies, I believe GFI stock will come out ahead in any outcome. With this upcoming shareholder vote, investors in both companies will have a say in whether this deal goes through. Thus, there’s reason to be bullish on this stock over the near term.
That said, should the deal get consummated as many expect, there’s much to like about Yamana’s assets. This company has mining operations in Canada, Chile, Brazil, and Argentina. Its gold reserves are impressive, providing Gold Fields with a longer operational runway and the ability to generate profitability in a rising gold price environment.
Over time, this deal will likely boost Gold Fields’ overall production by around 40%. For those bullish on where gold prices are heading, that’s a great thing.
Torex Gold (TORXF)
Another one of the boring stocks I’m looking at with excellent fundamentals is Torex Gold (OTCMKTS:TORXF). Another Canada-based gold miner, Torex’s mining operations are actually focused in Mexico. Thus, this often-underlooked gold miner provides tremendous upside potential from a valuation standpoint, as it doesn’t hit most investors’ radar screens.
Notably, Torex has a relatively small market capitalization, making this company an inherently higher-risk bet. That said, for those looking for outsized exposure to companies that will benefit the most from higher gold prices, this is one way to play that growth potential.
The company’s fundamentals stand out to me as the reason investors should consider this stock. Unlike many gold miners, which traditionally provide investors with sub-par returns on capital employed (ROCE), Torex’s ROCE stands at 23%. For those looking for a quick explainer on ROCE, this metric defines the returns a company generates from the capital it puts into its operations. Thus, this is one of the best ways to measure how a miner performs with its existing resources.
Over the medium term, Torex has been among the best performers in the small-cap space. Thus, as a more speculative bet on the gold mining space, this is a great place to start digging (pardon the pun).
Barrick Gold (GOLD)
Now, for a genuine blue chip stock in the gold mining space. Barrick Gold (NYSE:GOLD) has been among the world’s largest gold miners for a long time. This company’s size and scale are what certainly attract most investors.
Indeed, as far as blue-chip gold miners go, Barrick is my top choice. The company’s current mines in operation provide annual production of more than 500,000 ounces of gold. Over time, this is expected to increase as the company continues to add reserves via acquisitions and expand its existing footprint.
With the help of the Tanzanian Govt, GOLD has successfully resolved several disputes and has made itself a comfortable pick for investors in this market. Notably, Barrick has been among the leader in improving its employee pay, which has provided the company with stability during difficult times of late (namely, the pandemic). In particular, the company’s Twiga Partnership has been a turning point for its miners.
As Barrick continues to build relationships with local governments worldwide, this global gold miner stands to provide investors with among the most stable returns in the sector. Notably, this stock also provides a massive 5.3% dividend yield. As a mining stock, that’s a relatively unheard-of distribution and reason enough to hold this name right now.
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On the date of publication, Chris MacDonald 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.