This is not an easy time to be an investor in the equity markets, what with the recent selloff!
But every cloud has its silver lining – in this case, the fact that great defensive stocks are now available at a discount. A couple of weeks ago I had written about one such stock – Unilever – the price for which, has risen by almost 5% since the time of writing. But it is hardly the only such option available to investors.
Randgold Resources (LSE: RRS), the gold-mining FTSE 100 company, is another great buy!
Buy when it is down
While its share price has recovered from a sharp plunge seen in September, the average October price is still at lower levels than those seen last year: 21%, to be precise.
If you are a long-term investor in equities, there is no question about the fact that Randgold should be part of your portfolio in my opinion. Not only is gold as a commodity a great hedge against cyclical fluctuations in the economy and broader equity markets, this company is financially stable as well.
If these are not good enough reasons to buy the stock, I don’t know what are!
Tying the knot
Moreover, these are hardly the only reasons to consider Randgold right now.
The company is a heartbeat away from a merger with the largest gold mining company in the world, Canada’s Barrick Gold. Together, the new entity will boast of some of the most efficient gold mines in the world. More efficiency, lower costs and, hopefully, higher profits will be the result.
The timing of the marriage announcement (in September 2018) could not have been better. With the cycle of fear kicking into equity markets, gold prices have started rising. As investors in the stock markets fear the future turn of economic events, and the consequent impact on their investments, gold becomes more attractive, as a ’safe haven’ investment.
And what could be better for both Randgold and Barrick?
Not only is the new entity looking at lower costs, the revenues could expand on rising prices. And this isn’t just a short-term phase, either.
Investors in the UK might be paying particular heed to the economy at the present time. The Brexit deadline looms large on the horizon, but there is still no deal with the EU. This present cliff-hanger situation and the playout of the ultimate outcome is enough to keep investors on tenterhooks in the foreseeable future.
I also like the fact that Randgold has shown strong financial results over the past two years. Both its revenues and the income have been rising. This is good for Randgold’s share price, and little wonder that most analysts have given it a ‘Buy’ rating. If you are an investor who is more interested in the dividend rather than growth outlook, however, there is good news for you too. The company has decided to up its dividend levels by 35% for 2018 recently. What more can I say!
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Manika has no position in any of the shares mentioned in this article. 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.