The 3 Best Mining Stocks to Buy Now

  • The best mining stocks provide promising total return prospects no matter the economic circumstances.
  • Barrick Gold (GOLD): Regional strongholds and its Nevada Gold Mines venture could lead it to legendary status.
  • Sibanye-Stillwater (SBSW): This is a deep-value play with lucrative dividends. Operational disruptions are transitory.
  • Arch Resources (ARCH): Coal prices and output have surged, and ARCH is will positioned to take advantage.
best mining stocks - The 3 Best Mining Stocks to Buy Now

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I love holding mining stocks in my portfolio. Why? Because they can provide beastly performance no matter what the economic environment is like. Mining stocks operate in an industry with high barriers to entry and illustrious profit margins. Thus, you’re likely to receive solid capital gains and dividends throughout the economic cycle.

I understand many investors might be thinking primary sector stocks have topped out. However, there’s a fair argument that many of them lag behind their intrinsic value, providing investors much scope for deep value plays.

So, without further delay, here are my three best mining stock picks.

Barrick Gold (GOLD)

An image of multiple gold bars

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Barrick Gold (NYSE:GOLD) is a must-have in any mining portfolio. GOLD stock has prospered the past few years due to sound management of the company by new CEO, Mark Bristow. The Canadian company has 13 gold and copper mining operations, stretching from Nevada to sub-Saharan Africa. Additionally, Barrick is the world’s second largest gold mining company, which has led to regional market strongholds.

Furthermore, Barrick’s partnership with Newmont (NYSE:NEM) in its Nevada Gold Mines venture is seen as a gamechanger that could generate life-changing returns for both enterprises. Moreover, the company already possesses a solid market share, as its gross profit margin of 39% illustrates.

Lastly, GOLD is currently undervalued, as its earnings growth isn’t priced accurately by the market. For example, GOLD’s price-to-earnings ratio of 14.6x is at a 5-year discount worth 38%.

Sibanye Stillwater (SBSW)

A close-up photo of a platinum bar.

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Sibanye Stillwater (NYSE:SBSW) stock is a “buy the dip” opportunity after its 40% year-over-year drawdown. The company is one of the leading providers of platinum group metals (PGM) with a key focus on supplying the electric vehicle (EV) space. Furthermore, Sibanye owns strategic positions in gold mines with its Kloof and Beatrix properties in South Africa.

Sibanye’s profitability metrics embody its operational success. Firstly, its gross profit margin of 29% implies it has achieved economies of scale, meaning it holds much pricing power. Moreover, Sibanye produces attractive returns to its investors with a return-on-invested-capital ratio of 26%, which also conveys its extensive market position.

A final matter to mention is Sibanye’s total return potential. The stock is deeply undervalued with a forward price-to-earnings ratio of 4.4x and a forward dividend yield of 11.3%, providing investors with capital gains and income-based return prospects.

Arch Resources (ARCH)

An image of heaps of coal

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Contrary to popular belief, coal usage won’t disappear anytime soon. Sure, renewable energy is the future. However, renewable infrastructure needs to be developed by utilizing fossil fuels, and with the ex-Russia trade world, there’s a need for coal to stopgap some of the renewable metal and oil shortages. 

Let me provide some quantitative evidence: It’s forecasted that coal consumption will settle at a 10% year-over-year increase in December. In addition, coal prices have skyrocketed by more than double in the past year, leaving the industry’s producers with humungous profit margins.

Arch Resources (NYSE:ARCH) is one of the largest coal mining companies in the United States. The firm generates more than $2.5 billion in annual revenue from its cooking and thermal coal, which is provided by its seven actively managed and owned mines. ARCH stock provides solid returns to its investors with a current return on equity of 132%. More importantly, the stock’s undervalued with a price-to-earnings ratio of 2.4x, which is 71% below its sector median.

On the date of publication, Steve Booyens held a long position in SBSW. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Steve co-founded Pearl Gray Equity and Research in 2020 and has been responsible for institutional equity research and PR ever since. Before founding the firm, Steve spent time working in various finance roles in London and South Africa. He holds an MSc in Investment Banking from Queen Mary – University of London and is working towards his Ph.D. in Finance, in which he’s attempting to challenge the renowned Fama-French 5-factor pricing model by incorporating ESG factors. His articles are published on various reputable web pages such as Seeking Alpha, TipRanks, Yahoo Finance, and Benzinga. Steve’s articles on InvestorPlace form an interesting juxtaposition between mainstream opinion and objective theory. Readers can expect coverage on frequently traded stocks, cryptocurrencies, crowdfunding, and ETFs.

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