Times are tough for share investors right now and it’s quite probable that things are going to get tougher.
Things were bad enough amid tense trade talks between the US and China, Brexit and some patchy economic gauges from across the globe. But fresh GDP numbers from Germany suggest that it’s odds-on to experience a recession. Allied with signs that China’s on the verge of rolling its tanks into Hong Kong to quell demonstrations there, stock investors have even more to worry about.
Reflecting these new developments, the FTSE 100 has fallen by triple-digits again in Thursday business, meaning it’s now dealing at levels not seen since February, just above the 7,000-point mark. It’d take a braver man that me to suggest that additional heavy falls aren’t just around the corner.
That’s not to say it’s time to pull up the drawbridge and put your chequebook away, or to sell all your stocks and head for the hills. It simply means that we all need to be a bit more careful when it comes to loading our shares portfolio: there’s a galaxy of opportunities for long-term investors to capitalise on now, these recent equity market washouts leaving scores of splendid stocks carrying dirt-cheap valuations.
Indeed, there’s a group of particular dividend shares in great shape to thrive in the coming days, weeks and months, and that’s the gaggle of London-quoted gold-miners.
Let’s take Highland Gold Mining (LSE: HGM), for instance. While the Footsie index has fallen 8.4% from its 2019 closing peaks of around 7,686 points in late July, bullion values have gained around $100 in this time. And this has given Highland the fuel to punch extra gains in that time, the digger taking in fresh record highs of 230p per share just this week.
It’s obvious, then, that with the macroeconomic backdrop worsening and central banks engaged in a rate-cutting frenzy, the stage appears set for gold, and with it the Highland share price, to keep climbing.
Indeed, brokers have been furiously upgrading their forecasts in response to these testing times, the latest round of which has seen UBS raising its 2020 average price estimate by 100 bucks to $1,550 per ounce. Furthermore, the broker expects the metal price to keep rising thereafter too — prices of $1,600 and $1,650 per ounce are anticipated for 2021 and 2022 respectively.
A booming metal price isn’t the only reason to expect Highland to keep rising in September, however. Production at the business is firing again following earlier problems, the firm announcing in July that total gold output swelled 10% in the first half to 142,254 ounces. And another sentiment-boosting statement on current output could be just around the corner when interims are unveiled on September 3.
To summarise, there’s plenty that could send Highland’s share price to the stars next month, with its low valuation (it currently trades on a forward P/E ratio of 12.8 times) providing enough scope for a frenzy of buying activity from value investors. Throw a juicy 3.7% prospective dividend yield into the bargain and I reckon this particular mining giant’s a great stock to load up on today.
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Royston Wild 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.