These Crushed Gold Stocks Are Poised to Profit From a Gold Rebound

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Exchange-traded funds offer a convenient way to invest in sectors or niches that interest you. If you'd like to add some gold-related stocks to your portfolio, the iShares MSCI Global Gold Miners ETF (NYSEMKT: RING  ) could save you a lot of trouble. Instead of trying to figure out which companies will perform best, you can use this ETF to invest in lots of them simultaneously.

The basics
ETFs often sport lower expense ratios than their mutual fund cousins. The iShares ETF's expense ratio -- its annual fee -- is a rather low 0.39%. The fund is fairly small, though, so if you're thinking of buying, beware of possibly large spreads between its bid and ask prices. Consider using a limit order if you want to buy in.

This ETF is too young to have much of a track record to assess. It's down more than 40% over the past year, though. As with most investments, of course, we can't expect outstanding performances in every quarter or year. Investors with conviction need to wait for their holdings to deliver.

Why gold?
Gold is not everyone's cup of tea, but some investors like to include some in their portfolios for the sake of diversification. Some also favor precious metals, as some of them have more utility. With gold's recent plunge, some are steering clear, while others are seeing bargains.

It wasn't a pretty past 12 months for gold-related companies, due to falling gold prices, rising costs, and even some labor difficulties around the globe, along with a strengthening dollar.

AuRico Gold (UNKNOWN: AUQ.DL  ) plunged 44%, having posted some disappointing results lately, and is also suffering from a competitive disadvantage, with its costs above those of some peers. On the plus side, though, the company recently initiated a dividend, which now yields about 2.8%.

Kinross Gold (NYSE: KGC  ) sank 40%, and yields about 3%. It has some worried, with its rising debt, and recently negative free cash flow. Its stock has been setting some multi-year lows and, while its earnings are in the red, its revenue has been growing steadily over the past few years. Last year, management committed itself to quality over quantity -- and delayed some mining projects.

Randgold Resources (NASDAQ: GOLD  ) shed 19%, despite posting record production last year. The company has significant operations in Mali, which has been in the midst of considerable political upheaval. Still, its sizable African operations are promising. The company recently hiked its dividend by 25%,

Yamana Gold (NYSE: AUY  ) fell 18%. It recently yielded 2%, and it has been upping that payout significantly. Bulls like its conservative management and relatively low costs, and have high hopes for its recently acquired Cerro Moro mine in Argentina.

The big picture
A well-chosen ETF can grant you instant diversification across any industry or group of companies -- and make investing in and profiting from it that much easier.

Want another gold candidate for your portfolio? Consider Goldcorp, one of the leading players in the gold mining market. For the last several years, investors have been the beneficiaries of several successful acquisitions and strong organic growth. Goldcorp's low-cost production of one of the most sought-after metals in the world continues to make this stock an attractive choice for long-term investors. To learn everything you need to know about this mining specialist, you're invited to check out The Motley Fool's premium research report on the company, which comes with a full year of ongoing updates and analysis to keep you informed as key news breaks. Click here now to claim your copy today.

Read/Post Comments (4) | Recommend This Article (4)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On April 22, 2013, at 7:14 AM, JongM wrote:

    What about GoldCorp. GG has a good financial performance, yet is also suffered the same fate as the others not doing well in their financials.

  • Report this Comment On April 22, 2013, at 7:17 AM, JongM wrote:

    What about GoldCorp. GG has a good financial performance and yet it suffered the same fate as the others not doing well in their finances.

  • Report this Comment On April 22, 2013, at 10:17 AM, kurtdabear wrote:

    All four featured miners here are somewhat suspect:

    AUQ management's ability and judgment is questionable (I'm long via their acquisition of NGX.).

    KGC has large Russian exposure, and Russia has no rule of law or respect for private property.

    GOLD is heavily invested in South Africa, where orderly society is rapidly breaking down and tax burdens on mines are rising.

    AUY shows poor judgment in getting involved in a major project in Argentina, which has a semi-authoritarian government that is busily destroying the economy.

  • Report this Comment On April 25, 2013, at 10:07 AM, prettyobvious wrote:

    It's pretty obvious that MF or a hedge fund that paid MF is long each of these stocks.

    If you want a real example of a company that would profit from a rebound, check out Allied Nevada Gold (ANV) which was crushed 75%.

    This article reads like a pump for AUQ (it's the one that's down the most of the choices, and only so because of the buyback)

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Related Tickers

12/31/1969 7:00 PM
AUQ.DL $0.00 Down +0.00 +0.00%
AuRico Gold CAPS Rating: ***
AUY $4.51 Up +0.02 +0.52%
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GOLD $102.42 Up +1.33 +1.32%
Rand Gold Resource… CAPS Rating: ***
KGC $4.35 Up +0.05 +1.16%
Kinross Gold CAPS Rating: **
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