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IBD 50 Stocks To Watch: Franco-Nevada Near Buy Point As Gold Prices Hit Highs


Midas Member
Midas Member
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Apr 2, 2010
MOre investment porn so DYOD and I do hold FNV myself as an investment, not gold to hold.

Franco-Nevada Gold (FNV), featured in today's IBD 50 Stocks To Watch, is nearing a new buy point as the coronavirus continues to roil the global economy.

Since gold is viewed as a safe haven, economic distress or uncertainty tends to drive the precious metal's prices higher. Gold, as tracked by the SPDR Gold Shares ETF (GLD), is up 17% this year through Monday's close.
And VanEck Vector Gold Miners (GDX), which counts Canada's Franco-Nevada as one of its holdings, has advanced 21%.
Despite the coronavirus stock market rally, the S&P 500 is still down 5% this year, amid recent volatility as Covid-19 cases surge. Franco-Nevada, by sharp contrast, has rallied 34%.
The Toronto-based company is a royalty and streaming company with property interests in the U.S., Africa, Australia, Canada and Mexico. Though its main focus is gold, it also has varying interests in platinum, oil and gas, and other mineral properties.
Mining accounted for 86% of assets last year and energy the remaining 14%. Nearly half of revenue, 44%, was generated from Latin America, 20% from the U.S., and 19% from Canada.
Gold Exposure, Lower Risk?
According to the company, its business model "provides investors with gold price and exploration optionality while limiting exposure to many of the risks of operating companies." Franco-Nevada is virtually debt-free, and trades on both the Toronto and New York stock exchanges.
The stock has been shaping a shallow base with a 152.80 buy point since mid-May, according to MarketSmith chart analysis. It's a second-stage base that began taking shape after a 24% advance from a prior breakout in April. Leading stocks often make their biggest runs out of such early stage bases.

On June 22, the stock gapped up and rose 4% to retake its 50-day moving average. Volume was 16% higher than normal, signaling institutional buying. Franco-Nevada has trended higher along the 50-day line since.
IBD Stock Checkup assigns Franco-Nevada a highest possible 99 Composite Rating, which gives investors a quick way to assess a stock's key growth traits. That puts it among the top players in the 63-stock gold/silver/gems mining group, which includes fellow IBD 50 stock Kirkland Lake Gold (KL).
Top-Notch Ratings
Franco's 98 Earnings Per Share Rating is also among the best in the group. That reflects a five-year compound earnings growth rate of 23%. Analysts expect profit to rise 23% this year and 16% the next, according to FactSet.
On the technical side, a 91 Relative Strength Rating shows the mining play is beating 91% of all other stocks. Its B Accumulation/Distribution Rating points to more recent net buying vs. selling by mutual funds. The highly regarded Fidelity Contrafund (FCNTX) has been a longtime shareholder.