3 Affordable and Promising Canadian Mining Stocks
Jaiyant is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Canada has a wealth of natural resources, including a lot of materials and metals. Canadian mining companies have struck gold (literally), and have continued to mine for other metals that are in demand internationally. Canadian mining companies have the unique advantage of a safe and secure business atmosphere and governmental support to increase metal production.
As for investors, Canadian mining stocks promise great returns and tend to be more affordable than big mining companies located south of the border. In this article, I shall discuss three Canadian mining stocks with market values that are equal to or less than $30.
This gold mining stock pays great dividends
Agnico-Eagle Mines (NYSE: AEM) is a Toronto-based gold producer that operates in Mexico and Finland, along with Canada. As of 2010, it had paid cash dividends for 29 consecutive years, making it one of the most attractive mining stocks to own. It has a "no forward gold sales" policy and is considered one of the most transparent gold mining companies in the world.
In Canada, the company operates in LaRonde, Goldex and Lapa, all of which are located in Quebec. Meadowbank, an open pit mine, is located in Nunavut. Other than these, Agnico-Eagle also has mines in Kittilä in Northern Finland, and Pinos Altos in Mexico.
With exploration and development projects in the U.S., Agnico-Eagle is one of the most promising Canadian gold-mining stocks. Agnico-Eagle's assets across business-friendly destinations such as Finland, Mexico and of course, Canada make the company a long-term buy. Finland and Canada have the least security-related problems while Mexico's security problems do not affect mining companies. Precisely for its stability and security, I give a thumbs-up to Agnico-Eagle.
It currently trades at $30 and has a market cap of $5.2 billion. With a profit margin of 14% and an operating margin of 24%, it is one of the most profitable gold mining companies I have come across, almost giving larger and more glamorous gold mining stocks a run for their money.
Alamos Gold is a little known gold mining stock
Alamos Gold (NYSE: AGI) is one of the best kept secrets among the mining community. This Toronto-based company owns a group of concessions in Sonora, Mexico and Agi Dago and Kirazli gold projects in northwestern Turkey. Both the mining concessions are located in business friendly countries and Alamos Gold does not have much to risk in terms of geopolitics.
The mining concessions hold vast reserves of gold and considering the demand for gold internationally, Alamos Gold has a wide and far-reaching market for its products.
Moreover, thanks to a favorable business environment in Canada, we can expect Alamos Gold to be a good long-term option. The company has a staggering 33% profit margin and a 49% operating margin, suggesting immense potential for profitability. With a return on assets of 14% and a return on equity of 17%, Alamos Gold is managed effectively. At $14, Alamos Gold is one of the more affordable gold mining stocks to purchase.
A valuable Canadian uranium stock
Cameco (NYSE: CCJ) is not a small or little known company. The only reasons I included it is because it trades at $21 at the moment. It is the world's largest publicly traded uranium producer and is based in Saskatoon, Saskatchewan. It was the world's third-largest uranium producer in 2011 and accounted for more than 16% of global production. Cameco has uranium-mining operations in Nebraska and Wyoming in the U.S., Ontario, Canada and also in Kazakhstan.
The need for power and alternative sources of energy is ever increasing. Countries like India and China are hugely dependent on uranium for electricity and this will keep companies like Cameco in business for a very long time to come.
This is one of the reasons why Cameco is a good long-term investment option. With a market cap of approximately $8.3 billion, it is a very large uranium stock. Its profitability is average and that is because of the difficulties in selling uranium to international vendors. Uranium sales are limited by nuclear treaties unlike other material sales. This makes uranium stocks a little dicey and I can't justifiably compare it with a gold-mining or iron ore mining stock.
However, Cameco will find buyers for uranium through legal channels in Japan, China, India, South Korea and even Brazil. All of these countries experience significant energy deficits and have been on the lookout for alternative sources of energy, which includes nuclear-generated electricity. I see Japan, South Korea and China effortlessly increasing their uranium imports in the coming years. If Cameco manages to grab some deals, its profitability will increase dramatically.
Which one is the best?
Cameco, Alamos Gold and Agnico Eagle Mines sell for $30 or less. Of these, Alamos Gold is the cheapest. Cameco on the other hand is the most popular of these three stocks and costs only $21. Investing in a uranium stock is a good idea, especially when every country is looking for an alternative source of energy.
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Jaiyant Cavale has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. Is this post wrong? Click here. Think you can do better? Join us and write your own!