Agnico-Eagle Mines stock forecast (NYSE:AEM)

A year ago, Agnico shares were north of $70. Prices crumpled to as low as $33, though, on news that the company was forced to close its Goldex mine in Quebec due to safety concerns. It looks like a recovery is well underway.

This post is part of series where we’re checking in on the Top 500 gold and silver mining stocks profiled in our book Top 500 Gold and Silver Mining Stocks: Metalproofing Your Portfolio from the Coming Inflation Shock.

Performance: First, let’s compare Agnico-Eagle’s performance against the AMEX Gold Bugs Index (HUI) – a basket of industry-leading gold stocks.

Time Span AGONF Performance HUI Performance
1 Month +9.5% +13%
3 Month +18.8% +3%
YTD +33% -12%

Agnico-Eagle Mines is one of the top-performing stocks in the HUI this year. The stock also happens to be the smallest component of the HUI with a 3.11 percent weighting. As the smallest component of the HUI, Agnico’s market cap still stands at a massive $8.28 billion. Since it’s smaller than some of its peers, though, share prices could be a bit more volatile.

Why we like Agnico: 1.66% dividend; More than 21 million ounces of gold reserves. By market cap, Agnico is Canada’s fifth-largest gold producer. In Q3 2011 alone, the company increased its production by 11 percent to 265,978 ounces of gold. According to their most recent numbers, they’ve got total proven and probable gold reserves nearing 21.3 million ounces. http://www.agnico-eagle.com/

Recent News: RBC Dominion Securities raised their price target on Agnico-Eagle to $53 a share last week. A year ago, shares were north of $70. Prices crumpled to as low as $33, though, on news that the company was forced to close its Goldex mine in Quebec due to safety concerns. On top of that, Agnico wrote off part of its investment in its Meadowbank mine in Nunavut.

RBC analyst Stephen Walker says things are finally looking up. “The company has shown its ability to ‘under-promise and over-deliver’ on its operating results and drive strong performance at its five operating mines,” he wrote in a note (per the Financial Post). “However, we believe investors expect to see the company deliver results that are sustainable and demonstrate future growth over the next 2-3 years.”

Agnico’s looking to the future with new exploration partnerships in Colombia and Alaska (with Miranda Gold) among other places.

Agnico paid out a dividend of $0.20 cents on Aug. 30. That’s up 25 percent over the company’s $0.16 dividend a year ago. Thanks to growing enthusiasm for gold and silver mining shares, I think RBC’s price target is low, and I wouldn’t be surprised to see shares north of $60 a year from now.

Check out our book Top 500 Gold and Silver Mining Stocks: Metalproofing Your Portfolio from the Coming Inflation Shock (pictured above) to uncover more undiscovered gold and silver mining stocks.

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