At U.S. Global Investors, one of our favorite financial metrics for screening gold and precious metal mining stocks is free cash flow (FCF) yield, which we believe provides clear insight into a company’s financial health and operational efficiency.
To define FCF yield, let’s first look at free cash flow. This metric represents the cash a company gets to keep after accounting for its operating expenses and capital expenditures. In other words, it’s the money available for distribution to investors. Unlike earnings or net income, free cash flow is harder to manipulate on financial statements, making it a more credible reflection of profitability.
FCF yield is calculated by dividing the free cash flow per share by the current share price and presenting the result as a percentage. The higher the free cash flow yield, the better, as it signifies the company is generating ample cash relative to its market value. It can also suggest that a company is undervalued, pointing to a potential buying opportunity for investors.
Furthermore, a company with a high FCF yield can afford to pay dividends, buy back stock, decrease debt or invest in future growth—all actions that can potentially boost shareholder value.
That said, let’s explore the top 10 gold and precious metal mining stocks as of July 2023, beginning with number 10.
A Snapshot of the Top 10 Precious Metal Mining Stocks
10. Impala Platinum Holdings – 6.2% FCF Yield
Impala Platinum Holdings Limited, a leading platinum producer, opens our top 10 list with a decent free cash flow yield, signaling healthy finances.
9. West African Resources – 6.7% FCF Yield
Operating in Burkina Faso, West Africa, this Australian mining company has a substantial free cash flow yield, signifying operational efficiency.
8. Capricorn Metals – 6.9% FCF Yield
An Australian gold mining company, Capricorn Metals showcases a strong free cash flow yield, indicative of a strong financial position and high profitability.
7. Emerald Resources – 7.8% FCF Yield
Emerald Resources, an Australian exploration firm, presents a notable free cash flow yield, indicating profitability and strong cash generation capabilities.
6. Dundee Precious Metals – 9.4% FCF Yield
This Canadian-based international mining company exhibits a strong free cash flow yield, reflecting a healthy financial standing.
5. Resolute Mining – 13.6% FCF Yield
Resolute Mining, an Australian-African gold miner, sports a high free cash flow yield, a testament to its financial strength and efficient operations.
4. Northam Platinum Holdings – 13.6% FCF Yield
Operating in South Africa, Northam Platinum is a notable platinum group metals miner. Its high free cash flow yield shows its financial robustness.
3. Silver Lake Resources – 13.7% FCF Yield
Silver Lake Resources, based in Australia, presents a high free cash flow yield, reflecting its financial soundness and operational efficiency.
2. Perseus Mining – 15.3% FCF Yield
Perseus Mining, a gold exploration and mining company also based in Australia, has shown an impressive free cash flow yield, indicating strong cash generation capability.
1. China Gold International Resources – 18.7% FCF Yield
China Gold International Resources, headquartered in Vancouver, tops our list with the highest free cash flow yield.
As an investor, it’s crucial to monitor these figures and trends, as they provide vital signs of a company’s financial health and can guide decision-making in your investment journey. We always recommended considering a combination of metrics for a well-rounded view of a company’s overall performance and potential.
Many of the stocks above are currently being held or have been held in the U.S. Global GO GOLD and Precious Metal Miners ETF (NYSE: GOAU). With an emphasis on financial factors such as free cash flow yield, GOAU provides investors access to companies engaged in the production of precious metals either through active (mining or production) or passive (owning royalties or production streams) means.
All opinions expressed and data provided are subject to change without notice. Some of these opinions may not be appropriate to every investor.
Distributed by Quasar Distributors, LLC. U.S. Global Investors is the investment adviser to GOAU.
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