2 chances to strike gold by investing in stocks!

Investing in stocks can be daunting. But I’m hoping to strike gold by investing in these two mining stocks.

| More on:
Gold bullion on a chart

Image source: Getty Images.

I’m investing in stocks to make my money work and hopefully deliver inflation-beating returns. Today, I’m looking at two gold mining stocks, Centamin (LSE:CEY) and Polymetal (LSE:POLY). Centamin is offering an attractive 8% dividend yield while Polymetal looks cheap with a price-to-earnings (P/E) ratio of just 1.7. So, are these stocks right for my portfolio?

Centamin

Mining stocks have done well this year as commodity prices soared. However, the past year has not been kind to Jersey-registered Centamin. The share price, which stood at over 200p a share in 2020, is now just 87p. In April, it said full-year profits had halved on the back of forecast lower revenue and an impairment on assets in Burkina Faso.

5 Stocks For Trying To Build Wealth After 50

One notable billionaire made 99% of his current wealth after his 50th birthday. And here at The Motley Fool, we believe it is NEVER too late to start trying to build your fortune in the stock market. Our expert Motley Fool analyst team have shortlisted 5 companies that they believe could be a great fit for investors aged 50+ trying to build long-term, diversified portfolios.

Click here to claim your free copy now!

However, 2021 performance was roughly in line with pre-pandemic figures after a bumper 2020. And more positively, 2022 is forecast to be a better year. Gold production is set to rise this year having fallen to 415,370 ounces for 2021. Centamin said production is expected to be between 430,000 ounces and 460,000 ounces in 2022, with cash costs of $900-$1,000 per ounce produced.

Projected cash costs are roughly in line with 2021. Fourth quarter cash costs stood at $972 per ounce produced, and all-in sustaining costs were $1,256 per ounce sold. Profits will depend on gold prices but the current spot price is higher than the average price achieved in 2021.

The falling share price has made the firm, which operates the massive Sukari gold mine in Egypt, look more attractive to me. It has a P/E ratio of just 12.2 and offers a dividend yield of 8%. Falling gold prices could hurt profitability here – we may see commodity prices fall on the back on sustained lockdowns in China. Meanwhile high inflation levels, globally, could increase costs. Despite this, I’m backing Centamin and will look to add it to my portfolio.

Polymetal

Based on the previous year’s performance data, Polymetal has a P/E ratio of just 1.7. That’s either astoundingly cheap, or an indication that something isn’t right. In this case, the incredibly low ratio reflect the risks associated with its ability to operate as usual following Russia’s invasion of Ukraine.

Polymetal, which has mines in Russia and Kazakhstan, has highlighted uncertainty around funding as a result of sanctions placed on Russian banks and the state as a whole. Balance sheet constraints have exacerbated funding issues. There are also concerns that as Russia becomes more isolated, Polymetal may find it hard to sell its gold and other products. Fellow Russian miner Petropavlovsk has already noted issues selling its gold after its main customer, Gazprombank, was placed on a European sanctions list.

However, I’m bullish on Polymetal. Despite these issues, it should remain a top-10 global gold producer and top-five global silver producer if it can continue producing at the same levels. The miner said it expects to produce 1.7m ounces in 2022 — a figure similar to 2021. It has an attractive portfolio of assets and these are expected to yield high long-term returns. 

In the first quarter, production fell 6% but revenue rose 4% year-on-year to $616m, driven by higher prices. It may well be the case that the fall in production wasn’t a result of the geopolitical situation. Petropavlovsk actually announced that production had increased, despite the war. 

I held Polymetal shares before the war but recently doubled my holding after the price collapsed.

Is this little-known company the next ‘Monster’ IPO?

Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.

Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.

The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.

But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.

Click here to see how you can get a copy of this report for yourself today

James Fox owns shares in Polymetal. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Close-up of British bank notes
Investing Articles

How I’d invest a Stocks and Shares ISA to target yearly dividends of £1,350

Our writer reckons he could invest a £20,000 Stocks and Shares ISA to generate substantial dividend income. Here's how he…

Read more »

pensive bearded business man sitting on chair looking out of the window
Investing Articles

UK shares to buy now: how I’d invest a £1,000 lump sum

Our writer highlights some shares to buy now for his portfolio that he hopes offer both growth and income prospects.

Read more »

Investing Articles

3 top FTSE 100 shares to buy in a recession

Our writer explores three FTSE 100 shares that could protect the value of his stock market portfolio in the event…

Read more »

A Rolls-Royce employee works on an engine
Investing Articles

Could I double my money with Rolls-Royce shares?

Rolls-Royce shares have been on a downward track this year amid ongoing-pandemic related challenges. But is now a good time…

Read more »

Smiling senior white man talking through telephone while using laptop at desk.
Investing Articles

Down 50%, are Scottish Mortgage shares a bargain growth pick?

Scottish Mortgage shares have been on a steep downward track over the past six months. Down more than half, is…

Read more »

Note paper with question mark on orange background
Investing Articles

4 reasons why I would — and wouldn’t — buy Tesco shares for June

I’m looking for the best FTSE 100 shares to buy in early June. Is Tesco a brilliant blue-chip I should…

Read more »

Early morning sunlight filtering through the green foliage of an tranquil forest clearing
Investing Articles

Two things I like about Woodbois shares – and three I don’t

Our writer has been thinking about both the positive and negative points of Woodbois stock. Here he shares some insights.

Read more »

Thoughtful anxious asian business woman looking away thinking solving problem
Investing Articles

3 UK shares to buy in a stock market crash

Inflation and rising interest rates have our author on the lookout for a stock market crash. Here’s what he’s looking…

Read more »