Commodity prices have soared so far in 2022 as the combination of U.S. dollar inflation, stock market instability, supply chain disruptions and geopolitical conflict has driven demand for gold, silver, copper and other metals.
Gold and other precious metals serve as both an inflation hedge and a flight-to-safety investment, while copper and silver are both heavily used in the industrial sector and can be used as a measure of the rebound in U.S. economic activity following the pandemic. Rising metal prices are good news for mining stocks.
Here are seven of Bank of America (NYSE:BAC)'s top metal and mining stocks to buy.
Newmont Corporation (NYSE: NEM)
Newmont is the world's largest gold producer, but it also produces copper as well.
Analyst Michael Jalonen says Newmont has a proven corporate strategy of managing a portfolio of long-life assets in top-tier jurisdictions, maintaining a strong balance sheet, reinvesting in its business and providing capital returns for shareholders. Newmont has a strong free cash flow growth forecast, and Jalonene says it is building out a sustainable business. Newmont is targeting an impressive six million ounces of gold production per year by 2030.
Bank of America has a Buy rating and $75 price target for NEM stock.
Agnico Eagle Mines Ltd (NYSE: AEM)
Agnico Eagle Mines is a senior gold miner operating multiple mines in Canada, Finland, Australia and Mexico.
Jalonen says Agnico is an excellent low-risk gold mining stock for investors given its quality business. Agnico has a high-quality asset base and is forecasting 3.18 million oz of gold production in 2022 and 3.4 million oz in 2023. Jalonen is projecting $1.1 billion in free cash flow this year, the most cash flow of any gold miner he covers. He says Agnico can use that excess cash flow to fund growth projects and increase shareholder returns.
Bank of America has a Buy rating and $64 price target for AEM stock.
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Kinross Gold Corporation (NYSE: KGC)
Kinross Gold is one of the world's largest gold miners and operates in the U.S., Brazil, Mauritania and Ghana.
In early March, Kinross made the difficult decision to suspend operations at its mine in Kupol, Russia following the Russian invasion of Ukraine. Jalonen says Kupol was forecast to generate about 13% of Kinross' 2022 gold production, but the decision to pause Russian operations will eliminate a source of uncertainty and risk for investors. Jalonen says Kinross will still generate robust free cash flow of $780 million this year, even without Russian production.
Bank of America has a Buy rating and $7.50 price target for KGC stock.
Barrick Gold Corp (NYSE: GOLD)
Barrick Gold is a global gold miner that operates mines in the U.S., South America, Papua New Guinea, Africa and Saudi Arabia.
Jalonen says Barrick generates robust free cash flow, has a shareholder-friendly capital allocation program, has significantly improved its balance sheet and is advancing several key growth projects. The company's 10-year plan calls for stable gold output of between 4.5 million and 5 million oz of production per year, but Barrick also has projects in place to boost production in the latter part of the decade.
Bank of America has a Buy rating and $31 price target for GOLD stock.
Pan American Silver Corp. (NASDAQ: PAAS)
Pan American Silver is one of the world's largest silver producers and operates mines in Bolivia, Mexico and Peru.
Analyst Lawson Winder says the company has a strong balance sheet, a diversified asset portfolio and a shareholder-friendly capital return program. Winder says Pan American Silver should benefit substantially from rising silver prices, which are already up 67.9% in the past three years. Winder says the recent closure of the Morococha mine was a disappointment, but the stock remains undervalued given his $31/oz 2022 silver price target.
Bank of America has a Buy rating and $28 price target for PAAS stock.
Alcoa Corp (NYSE: NYSE:AA)
Alcoa is a vertically integrated aluminum company that mines bauxite, refines alumina and smelts aluminum. It also casts aluminum products.
Winder says Alcoa has low bauxite and alumina unit costs and it has a goal of becoming the lowest carbon emitter in the global aluminum industry. The company is targeting a 2024 commercialization of its Elysis low carbon aluminum production technology. Winder says Alcoa has a solid balance sheet and benefits from its vertically-integrated business.
Bank of America has a Buy rating and $89 price target for AA stock.
MP Materials Corp (NYSE: MP)
MP Materials owns and operates the Mountain Pass mine in California, the only scaled rare earth mining and processing facility in the Western Hemisphere.
Winder says MP provides investors with attractive exposure to rare earth minerals, which are scarce, relevant for national security purposes and have critical applications. Winder projects strong earnings growth for MP through 2023 and says Mountain pass is a high-quality mining asset. The scarcity of rare earth minerals insulates MP from competition, and Winder says MP could potentially vertically expand its business into magnet production.
Bank of America has a Buy rating and $50 price target for MP stock.
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