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Company Highlight: Agnico Eagle Mines Limited (AEM)
Agnico Eagle Mines (AEM) is a major gold mining company in Canada, known for its extended history of gold exploration, development, and production. It has a diversified portfolio of mines mostly in North America with a few projects across Europe. AEM has been somewhat acquisitive over the years, with the acquisition of Kirkland Lake Gold in 2022. The name offers operational stability since most of its operations are in Canada, the US, and Finland, which are miner-friendly regions.
AEM has been one of the most solid performers in the Canadian materials space, with a 10-year total return CAGR of 14.8%. In terms of its financials, it pays a 1.9% dividend yield, has a strong track record of sales and earnings estimates, and analyst estimates have been rising over the past year. The company is highly dependent on the price of gold, but with the underlying price of gold rising to new highs over the past several months, we feel AEM has some solid tailwinds. It is a large gold miner ($55 billion market cap) and both EBITDA and sales have grown nicely over the years (37% and 28% five-year CAGRs, respectively).
Its valuation has compressed over the years, reaching a forward P/E multiple of 18X today. Given the expected growth in sales and earnings over the next year (29% and 78%, respectively), we like the prospects of AEM today, particularly with a rising spot price of gold.
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