Investing in Gold: 2 Stocks to Buy, 1 to Avoid
"Gold streaming companies like Sandstorm (NYSEMKT: SAND), do offer quicker and greater gains than gold mining companies, but their business operations are highly leveraged. Also investors need to understand that consolidating (non-trending) or falling gold prices negatively impacts the profitability of such companies. However, streaming companies do not involve operational risks involved in mining like the collapse of a mine or an explosion.
If the risks and rewards associated with streaming companies are acceptable, then in my opinion, investors should be looking at Sandstorm Gold. The company recently reported record quarterly revenues of $15.1 million and operating cash flows of $10.6 million. Sandstorm has cash reserves in excess of $150 million, and the CEO of the company announced that it would be looking to acquire additional gold streams. The company operates with little or no debt, with a quick ratio of 15.74x along with a huge pile of cash reserves, Sandstorm Gold could make strategic acquisitions without any debt repayment issues. In my opinion, investors should look to invest in Goldcorp and Sandstorm as both companies offer huge potential upside in the near term future."