That slide is likely to continue today too. It seems that Cineworld is looking to close all of its cinemas across the UK and Ireland — temporarily for now. That means all 128 of them. This is obviously a disaster for Cineworld. Its business model is totally reliant on customers paying for tickets and snacks and refreshments. There’s no digital option for it. To make even matters worse, the company is looking to close all of its 536 US cinemas too.

Why are they closing?

Cinemas across the country had been eagerly awaiting the latest releases – and one film stood out above the rest. The latest James Bond movie – No Time To Die – was due to be released in November. It has already been delayed, having been previously planned for a spring 2020 release. Cineworld was confident that a release of this calibre – with the cultural significance that Bond has in the UK – would breathe new life into the business.

As you’ve probably guessed, those hopes have been dashed. The release of No Time To Die has been delayed again, until an unannounced date in spring 2021. In response, Cineworld is drawing up plans to close cinemas until such a time when new films like the next Fast & Furious will finally be released. It’s highly likely that the share price will be majorly impacted by this news when the market opens this morning.

What next for the Cineworld share price?

For me, there’s plenty of reason to be concerned for the company’s future. It’s not just Covid that’s crushing the share price. Streaming services like Disney+ are landing heavy blows on the cinema industry. Streamers are releasing their new films directly on their services, taking away the once exclusive monopoly that cinemas once enjoyed. Another kick in the teeth for Cineworld is that it had until recently been on an acquisition spree, loading up with debt to become one of the largest cinema chains in the world. Now all these cinemas have to close. But the debt can’t be closed with them. That debt is staying.

Cineworld had already announced losses of £1.3bn in the first half of 2020. What next? It doesn’t look pretty. So, when you see the Cineworld share price going further and further down, that might be because the outlook keeps getting bleaker and bleaker. A search for more financing is quite likely.

However, if the company can ever get back to its previous revenue (a big ‘if’, with the trend towards streaming well established) then perhaps it would have been a good idea to get in when things were looking at their worst. That said, it’s hard to find an industry that has been hit harder and one for which the future looks as tough as it does for cinemas.

The post What next for the Cineworld share price? appeared first on The Motley Fool UK.

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Toby Aston has no position in any of the shares mentioned. 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.

The results are in

The company has just released its H1 (first two quarters) results, announcing a pre-tax profit of €40.2m in the six months to 30 June, compared with a loss of €2m a year ago. Revenues were also up 900%. Not bad at all! EBITDA also rose – from €0.2m (2019 H1) to just under €50m. Directors believe demand will grow until “at least the first half of 2021” under the tense conditions presented by Covid-19.

The massive demand for PCR testing kits has of course been the main driver for these results and the rapid advancing of the Novacyt share price. And the company is looking to build upon its success. A new avenue is currently being explored in the launch of a diagnostic test designed to tell the difference between Covid-19 and the flu. This is well-timed, coinciding with the approaching winter flu season. So, the company is looking to the future. But what about the shares?

Is the Novacyt share price too high?

Full-year revenues are expected to exceed €150m and EBITDA to exceed €100m. For a company with a market cap of £280m, that’s a pretty strong performance if the guidance does play out as expected. But we must remember that 2020 has been an exceptional year and a very fortunate one for Novacyt. In 2019, the company recorded a net loss of £6.5m. In fact, 2020 will be the first year that will show any profits. If the Covid-19 threat dwindles (and that’s a big if), will Novacyt be able to sustain this year’s profitability?

Investors are always looking to the future. Part of the current price of a stock is always a judgement of the company’s future performance. The Novacyt share price is no different. The only way the stock can keep rising is by finding new avenues for profitability – especially in a post-Covid age. One hope is that the global contacts and networks that will be created during the pandemic will provide access to wider markets for other products in the future. The firm has repaid all its outstanding debts as well investing heavily in its inventory. Despite this, it was still left with €19.7m in cash flow as of 30 June.

It’s certainly possible that Novacyt could grow over the next few years into a profitable business that would justify the massive recent share price growth. At the same time, it’s also possible that 2020–21 was a brief period of fortune and the days of profit will disappear as quickly as they arrived. At this stage, in my opinion, you have probably missed the bargain that early 2020 provided.  

The post Is the Novacyt share price too high? Here’s what you need to know appeared first on The Motley Fool UK.

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Toby Aston has no position in any of the share mentioned. 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.

Allergy Therapeutics (LSE:AGY) is a long-established specialist in the prevention, diagnosis, and treatment of allergies.

The company has a three-part strategy for growth. First, it will continue to develop its European business via investment or opportunistic acquisitions. Then, it has an opportunity to expand its Pollinex Quattro immunotherapy platform in the US market. Finally, it has a pipeline of therapies to develop.

Allergy Therapeutics’ Pollinex is the only subcutaneous immunotherapy (SCIT) pollen product currently registered in the UK. SCIT is the most commonly used and most effective form of allergy immunotherapy. It’s the only treatment available that actually changes the immune system, making it possible to prevent the development of new allergies and asthma.  

Before even considering investing money in the company, let’s see how it has performed recently.

Analysis

Allergy Therapeutics’ European business has expanded in recent years, with particularly strong growth in Austria, the Netherlands, and Spain. In terms of products, Venomil, Acarovac Plus, Pollinex and Pollinex Quattro were the top performers – driving net sales growth of 8% to £73.7m in 2019. The operating margin for the last 12 months is around 12%. That’s lower than GSK (18.5%) but higher than Astrazeneca (10%). Obviously, comparing Allergy Therapeutics to the giants isn’t meaningful; its market cap is 1,000 times lower at just £89m, but it does give us a good comparison for a healthy margin in the pharmaceutical industry.

Management expects this financial year to show further growth in sales, too. Gross margin percentage growth is likely to be similar to the 2019 financial year, though other operating costs are likely to rise reflecting additional cost in technical support needed in preparation for Brexit.

According to a 2018 report published by Credence Research, Inc., the global allergy immunotherapy market was valued at US$1,499m in 2017, and is expected to reach US$3,602m by 2026 – expanding at a compound annual growth rate of 10.1%. Could Allergy Therapeutics capitalise on that potential growth with their products currently in the pipeline? It’s certainly possible.

Key drivers

So, what are the risks, if you’re thinking of investing money in Allergy Therapeutics? Over the next two years, the company will be running several important clinical trials. These have binary outcomes – either success or failure. The company’s long-standing operations will mitigate this risk to some extent. A second wave of the Covid-19 pandemic would also like have a big impact on forecasts.

The company is likely to invest heavily in research and development as it puts new products though each phase of the pharmaceutical pipeline. This is essential to meeting the demand they are expecting for immunotherapeutics in the future. However, success hinges on whether that demand will actually be there when the products become available.

With a small and lesser-known business like this, you should only be investing money that you can afford to lose. That said, Allergy Therapeutics does look like it has a solid plan to make a lot of money in the future.

The post Should you be investing money in pharma stocks? appeared first on The Motley Fool UK.

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Toby Aston has no position in any of the shares mentioned. 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.

So, can the gold boom continue? Here’s one reason why it might, and why you might want to invest in it.

Gold is REAL money

Gold has intrinsic value. It’s a great metal for jewellery of course, but it also has applications in computer hardware and other tech. The reason it’s not used more is because it’s expensive. Why is it expensive? Because it’s rare.

The most annoying thing about gold for Jerome Powell (chairman of The Federal Reserve in the US) is that he can’t print it. Dollars on the other hand – no problem. The actual method of money printing via quantitative easing (QE) is complicated, but the end result is more dollars and thus the money supply increases. This sneaky bit of financial engineering is allowing the US government to borrow dollars that didn’t exist yesterday and the Bank of England is doing the same thing. Gold supply, on the other hand, is far more constrained. Only a certain amount can be mined per year in practice – and that number’s pretty stable. So as paper notes increase in supply exponentially, but gold supply remains fixed, more and more paper notes will be needed to buy it. This is inflation which, incidentally, the Fed is expected to commit to ramping up.

How you can invest

The savvy investor will want to profit from this, and here’s how:

• You can buy gold itself. The Royal Mint Bullion offers the opportunity to buy and sell physical gold. Alternatively, investors can consider physical gold exchange-traded funds (ETFs), such as the WisdomTree Physical Gold ETF or the Invesco Physical Gold ETC. The only concern is gold’s volatile price. You shouldn’t put a big chunk of your portfolio in any commodity.
• You can buy gold-mining companies’ stocks. Within the FTSE 100 and FTSE 250, companies that mine gold include Chile’s Antofagasta, Mexico-based Fresnillo, Russian mining operation Polymetal International, and Centamin, which focuses on the Arabian-Nubian Shield. Gold-mining stocks tend to be more stable than the underlying commodity and they pay dividends.

If you have some money set aside for investing — like £1k, for instance — my top pick in the gold sector is FTSE 250 firm Centamin, which produces gold from its Sukari mine in Egypt. Like most gold-miners, Centamin has benefited from the run-up in the price of gold over the last five years. With gold prices rising and potentially rising even faster soon, profits could be set to shoot up. And with a dividend yield of 4.35% and a P/E of 18, a share price of 221p doesn’t look too pricey to me, even if it’s not as good a bargain as at its 149p low in June.

The post Can the gold boom continue? appeared first on The Motley Fool UK.

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Toby Aston has no position in any shares mentioned. The Motley Fool UK has recommended Fresnillo. 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.

The easyJet share price (LSE:EZJ) has had a turbulent journey through 2020. After plummeting 70% from high to low, the stock has somewhat recovered in the last few months. But it’s still way below where it was before the March panic-selling spree. Does that mean it’s a cheap deal? Not necessarily.

Flying through cloudy skies

All airlines are facing difficulties beyond anything they could have imagined this year. This is no mere economic crisis. The major problem is coronavirus, but more importantly social distancing. With the exception of Delta, none of the major airlines flying out of the UK, intend to leave seats empty to maintain social distancing on board. This is concerning for passengers. According to a recent report, a third of travellers say they will avoid flying for both leisure and business due to fears of catching coronavirus. The IATA study found that people’s biggest worry was sitting next to someone on the plane who might be infected. If you ask me, this is a pretty valid concern.

But easyJet has its own problems too, notably the stand-off between the board and the founder about the future of the company. The latest incident came on 4 July when founder Sir Stelios Haji-Ioannou called the board ‘dishonest’ over their claims about the company’s finances. The directors have said that the company has been prudently managed through the crisis and is financially secure for the future. The company still has an order placed for 107 new Airbus aircraft, which Haji-Ioannou has been consistently been campaigning for the company to cancel.

Stelios says this is an expense the company cannot afford – and he may be correct. The board has already raised an extra £400m by selling 60m new shares. Haji-Ioannou’s share in the company has been diluted to under 30%. The easyJet share price is now at 664p, around 6% lower than the issue price of the new shares on the 24 June.   

What to make of the easyJet share price?

Though shares are selling at more than a 50% discount to March highs, they are certainly no bargain. The landscape has changed for airline companies. Some will make it through, but safety is not assured. It is hard to see how easyJet is better positioned than other airlines for the tough road ahead. Despite the equity sale, the balance sheet still looks precarious.

In my view, easyJet’s future will be determined by how quickly things return to ‘normal’. If social distancing and confidence return all may be well. If not, then it will be hit as hard as others – if not worse. In this imagined future, the board may be required to make yet another equity issuance, further diluting the value of current shareholdings. This is certainly a possibility. Overall, while a strong recovery in the easyJet share price is definitely a possibility, this has not come – in my view – from good management. As such, there are plenty of better places to put your money.

The post Is the easyJet share price ready for takeoff? appeared first on The Motley Fool UK.

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Toby Aston has no position in any 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.

They allow you to hedge your portfolio against inflation and uncertainty

You may already have a diversified portfolio of well-picked stocks, but if there’s market uncertainty, those shares might lose a lot of value. Gold has – for a long time – been the top pick for inflation hedgers. But I think the miners themselves are likely to benefit even more.

They can pay healthy dividends

If you’re looking for a source of income, dividend-paying shares can provide an alternative to the pitiful returns of government bonds. Always research the company first though, to be sure the dividend stream won’t dry up.

You can benefit from central bank money printing

The Bank of England, alongside many other central banks, is printing massive quantities of money to keep the economy going. Where is all this new money going? Assets. And when there’s more cash but the same amount of metal, that metal is going to be worth more. Good news for the FTSE mining stocks – and it could be good news for you too.

Which FTSE mining stocks are looking good?

Centamin is trading at 149p. Its price has fallen since the US released rosy-looking jobs data – suggesting more people were back in work than had been let go. But that doesn’t change the fundamentals. In fact, at this lower price, the dividend yield is even more appetising. Even better, Centamin announced last month that operations in the Egyptian Sukari mine were unaffected by coronavirus. We’ve already seen the shares go past 190p, so there’s great upside potential.

Other great FTSE mining stocks include Anglo American, which produces platinum and other metals and minerals needed for industry. It is currently selling around 8.5 times earnings, with a current ratio just under 2. EBITDA has increased consistently since 2015. The company has trimmed the total number of mines it operates and cut costs – yet still managed to increase revenues. These improvements in cost control and productivity, along with better prices have raised profits and cash generation. Debt’s down too, from $12.9bn in 2015 to $4.4bn today. The stock has risen by 36% in the last month though, so it’s not as good a bargain as it was!

Copper company KAZ Minerals focuses on large scale, low cost, open pit mining in Kazakhstan, Russia, and Kyrgyzstan. Like Anglo American, KAZ Minerals restructured – and has performed impressively since 2014. Unlike other mining companies, Kaz Minerals focuses primarily on copper mining. Diversification within the mining sector would be beneficial to your portfolio, and this stock could help with its strong focus on a vital industrial metal like copper. Like Centamin, the group’s operations have been largely unaffected by Covid-19. Management are leaving production targets for the full year unchanged. 

I think all these FTSE mining stocks have potential to keep going up if the economic recovery holds. So have a look, do some digging, and mine yourself some nice profits.

The post Are FTSE mining stocks still a good buy? appeared first on The Motley Fool UK.

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Toby Aston has no positions in any of the shares mentioned. 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.

Putting the Novacyt share price under the microscope

Last year Novacyt reported a loss of £6.5m and earnings per share of -0.12p. That’s not a brilliant start. Obviously, without earnings, the shares do not pay a dividend. Cash flow before financing is also in red territory. The debt ratio has tripled from FY2018 to 2019 and debt to equity is up by 150%. And just to put the boot in, revenues have declined year on year since 2017. From first inspection, Novacyt looks like a company increasingly relying on outside financing to sustain slowly declining sales. But all that data is from the past – when the Novacyt share price was at 12p. Investors have become a lot more excited since then. Let’s see why.

Never let a crisis go to waste

Much of the investor interest stems from Novacyt’s ongoing work on a fast-turnaround testing solution for Covid-19. Called a CE-Mark test, it is designed to allow non-clinical staff to apply fast tests to suspected cases. Additionally, its PCR tests are used to detect antigens, which can determine whether someone has the virus or not. The company quickly established the need to develop significant manufacturing capacity, and today has eight dedicated manufacturing sites capable of producing Covid-19 tests at an output rate of more than 10 million tests per month, which Novacyt expects to achieve from June onwards.

The Directors believe the significant demand for the Company’s Covid-19 test will continue through to the end of the year, and may extend well into 2021, as the global demand for Covid-19 testing continues to increase. Another hope is that the global contacts and networks that will be created during the pandemic will provide access to wider markets for other products in the future. If the company can become consistently profitable, the Novacyt share price could keep climbing.

Looking to the future…

Savvy investors will want to know how Novacyt will continue to make money once the pandemic finally fades into the background. The Directors’ belief that mass Covid-19 testing will continue until 2021 still leaves open the question: what next? Indeed, the demand will fall away at some point. Perhaps when we see a vaccine for Covid-19. The company states that its customer base has significantly increased around the world, and cash has risen from €1.8m as of 31 December 2019 to €9.2m at the end of April. The company has never looked in a healthier position than it does now. It’s no wonder that the Novacyt share price has risen so dramatically! The question is whether they can translate good fortune into a viable business future. If so, Novacyt could represent a good investment.

The post The Novacyt share price has risen 2,500% this year! Is it worth adding to your ISA? appeared first on The Motley Fool UK.

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Toby Aston does not own shares in any of the companies mentioned. 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.

The travel industry has almost collapsed as a result of the coronavirus pandemic, with airlines cutting hundreds of thousands of flights and taking thousands of planes out of service. Air travel may not return to pre-coronavirus levels until mid-2021, at the earliest. Airlines will likely need to reduce their fleet sizes to match future flight capacity and reduce long-term costs. Billionaire investing guru Warren Buffett has dumped all his holdings in US airlines, fearing “the world has changed” for the travel industry. Can UK airlines like easyJet navigate their way through the cloudy future?

What is management’s plan to lift the easyJet share price?

The easyJet share price dropped from its February high of 1,552p to a low of 475p in April. That’s a 70% drop. A large part of its fleet could continue to be grounded while the company pays its costs. This will lead to an uncertain financial future for the business. However, it has been able to reduce costs and access funding arrangements in recent weeks to improve its outlook.

The low-cost carrier announced that its initial schedule will involve mainly domestic flying in the UK and France. UK airports to be served by easyJet from June 15 include Gatwick, Bristol, Birmingham, Liverpool, Newcastle, Edinburgh, Glasgow, Inverness and Belfast. However, the only international route from the UK will be between Gatwick and Nice, France.

Turbulence ahead…

Despite the recent drop in easyJet’s share price, it is not necessarily a bargain. Looking at the company’s financial statements reveals a few weaknesses that may discourage investors. Though revenues are up – the past five years have shown strong revenue growth – earnings are declining. easyJet earned 37% less in 2019 (before coronavirus) than it did in 2015. The operating margin has been cut in half since 2018, from 14.7% to 7.3%. Yet the company’s shares were still selling at a higher P/E ratio than they were in 2015. That suggests easyJet may be overvalued.

Current assets and liabilities also highlight weaknesses. Far from having a strong current ratio, net current assets are over half a billion in the red. Total current liabilities have risen almost £500m since 2018.

This weak financial data is also accompanied by infighting between the easyJet’s founder, Stelios Haji-Ioannou and the board of directors. A dispute over an order of Airbus aircraft lead to Mr Haji-Ioannou calling a vote to remove four members of the board including the CEO and the CFO. Despite shareholders backing the board members in the vote, CFO Andrew Findlay has announced his resignation from the company today.

Whether buying 100 new aircraft at £4.5bn – when your current fleet is grounded – is wise remains to be seen. Stelios, who owns 33.7% of the company, has been arguing for years that the fleet should be reduced from 344 planes to 250.

Against this backdrop, and with this level of uncertainty, it seems a big task to get the easyJet share price back to its pre-coronavirus levels. If you’re thinking of investing, you better wear your safety belt and check your lifejacket is stowed beneath your seat.

The post The easyJet share price is taking off! But is it worth investing in? appeared first on The Motley Fool UK.

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Toby Aston does not own shares in any of the companies mentioned. 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.

Cheap FTSE stocks exist, if you look carefully…

Can investing in shares give you great returns, even during coronavirus? Of course! But you must pick your portfolio wisely. Here are three shares from the FTSE 350 that I think show great promise for the future:

Back to bus-ness

National Express (LSE: NEX) has started selling travel tickets for July 1^st onwards. The company will start off by operating a core network in the UK focused on large and medium-sized cities and towns. After a tough few months, some earnings will finally start trickling in.

With its shares still selling more than 50% lower than the January high, there could be a nice profit when earnings normalise in 2021. Whilst the current ratio is relatively low, the company has improved its liquidity position – it now holds £1.5 billion in cash and undrawn committed facilities. And, at 210p, these shares are trading at just six times last year’s earnings.

Though future earnings are likely to be largely depressed and dividends interrupted in the short-term, 2021 should be a brighter year for National Express. Its shares have more than doubled from its lockdown lows, but there could still be a lot of upside potential!

A potential gold mine

The Federal Reserve is printing huge amounts of money. When the money supply increases, the likely outcome is inflation. As such, commodity prices are likely to skyrocket. Gold-mining companies could benefit greatly from rising commodity prices and so too could their shares!

Centamin (LSE:CEY) is a FTSE 250 stock currently showing strong gains – it’s up 80% from its March low. Centamin says its Sukari mine in Egypt is fully operational. It has been unaffected by the coronavirus outbreak and there are enough workers and supplies to last into the third quarter – when global travel restrictions are expected to ease.

It is currently providing a dividend at a 4.4% yield of the current price (186p). This passive income can be re-invested and bolster your growing portfolio.

Anglo American dream

Another FTSE mining company, Anglo American (LSE:AAL) produces platinum as well as other metals and minerals needed for industry. It is currently selling under 10-times earnings, with a current ratio just under 2.

EBITDA has increased consistently since 2015, when crashing commodity prices precipitated a loss. The company has cleaned up since then, trimming down the total number of mines it operates and cutting costs – whilst increasing revenues. Improvements in cost control and productivity, along with better prices has done wonders for profits and cash generation. Which is reflected in the balance sheet too – debt’s down from $12.9bn in 2015 to $4.4bn today. 

The stock is fairly expensive at 1,573p, so the amount you should purchase depends on the total amount you are willing to invest. Mining stocks aren’t very glamorous, but that doesn’t mean they won’t add a shine to your diversified portfolio!

The post £5k to invest? I’d add these cheap FTSE stocks to my portfolio now appeared first on The Motley Fool UK.

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Toby Aston has no position in any shares mentioned. 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.

Yet have we learnt from our mistakes? Central banks have been pursuing policies of mass money printing under the guise of ‘quantitative easing’ (QE). This involves the creation of new money to buy bonds and other assets in order to inject new money into the economy. Sounds great, right?

The idea was that central banks like the Federal Reserve could kickstart their economy on a bad day and balance the books later on when everything was going well. Only that never happened. QE started in 2008, with another round in 2010 and yet another round in 2012. But the balancing of the books never came. Now with coronavirus, the Fed has pledged to do “whatever it takes” — aka QE infinity.

We’ve all been told that this won’t cause inflation. “Just look at the Consumer Price Index” (CPI), they say. Yet the CPI doesn’t include assets like house prices. Aren’t house prices something a consumer is interested in?

Inflation is rising fast, we just haven’t seen it in our day-to-day lives – but soon enough, it will creep its way into the CPI.

How is this related to gold?

Well, all this money printing means more cash is chasing the same amount of stuff. No matter how much money you print, there is the same amount of gold as there was before, but more money to buy it with. It’s not a coincidence that the gold price has been soaring since 2008, when QE1 began.

Image source: BullionByPost.co.uk. Gold price (£ per ounce) 2000-2020

You can see how quickly gold prices shot up from 2008 until 2012 (when the Fed announced relaxation of QE) — and you can see it ramping up again.

Gold-mining stocks in demand

The savvy investor will want to profit from this, and here’s how:

• You can buy gold itself. The Royal Mint Bullion offers the opportunity to buy and sell physical gold. Alternatively, investors can consider physical gold exchange-traded funds (ETFs), such as the WisdomTree Physical Gold ETF or the Invesco Physical Gold ETC. The only concern is gold’s volatile price. You shouldn’t put a big chunk of your portfolio in any commodity.

• You can buy gold-mining companies’ stocks. Within the FTSE 100 and FTSE 250, companies that mine gold include Chile’s Antofagasta, Mexico-based Fresnillo, Russian mining operation Polymetal International, and Centamin (LSE: CEY), which focuses on the Arabian-Nubian Shield. Gold-mining stocks tend to be more stable than the underlying commodity and they pay dividends!

If you have some money set aside for investing — say, you’ve saved £1k from recent pay cheques — my top pick in the gold sector is FTSE 250 firm Centamin, which produces gold from its Sukari mine in Egypt. Like most gold miners, Centamin has benefited from the run-up in the price of gold over the last five years. But cuts to production guidance have seen the shares drift lower since 2017. However, with prices rising and potentially rising even faster soon, profits could be set to shoot up. And with a dividend yield of 5.2%, a share price of 162.4p doesn’t look too pricey to me.

The post £1,000 to invest? I’d buy gold-mining stocks to beat the market crash appeared first on The Motley Fool UK.

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Toby Aston has no position in any shares mentioned. The Motley Fool UK has recommended Fresnillo. 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.