The shares of this gold royalty company recently hit a 52-week high, and the future looks promising.
Franco-Nevada Corporation (FNV)
From Adrian Day’s Global Analyst
Conservative Pick
Franco-Nevada Corporation (FNV) is a leading gold royalty company. Despite an almost 50% appreciation last year, I am recommending it as the lowest-risk way to get broad exposure to the gold mining sector.
Franco acquires royalties and streams from mining companies in return for upfront capital. Currently, Franco generates revenue from almost 40 separate mines, operated by other companies, with a pipeline of over 300. In addition to gold, Franco generates revenue from other resources, including silver and even oil.
Franco has a strong balance sheet, with $1.2 million of available liquidity. Only twice in its history has Franco taken on debt, both times to fund a major investment. As last time, I expect the debt to be repaid in short order. It also has the best management in the mining business, with gold legend Pierre Lassonde the chairman.
The company’s conservative way of valuing assets and aversion to debt is embedded in the company culture. With a yield a near 1%, the company has increased its dividend 11 times over the past decade. Any conservative investor wanting exposure to the gold sector—and I believe this is a good time to be buying gold—should look no further than Franco-Nevada.
Adrian Day, Adrian Day’s Global Analyst, www.adriandayglobalanalyst.com, 410-224-8885, December 28, 2019