We recently compiled a list of the 10 Best Breakout Stocks To Invest In Right Now. In this article, we are going to take a look at where Agnico Eagle Mines Limited (NYSE:AEM) stands against the other breakout stocks.
Since 1950, the S&P 500 has posted at least a 15% gain through September on 17 occasions. In those years, the index rose a median of 5.4% in the fourth quarter and ended the year with gains in all but three instances, according to Keith Lerner, co-chief investment officer at Truist Advisory Services. Strong gains in U.S. stocks this year suggest a positive outlook for the remainder of 2024, if historical trends hold.
The S&P 500 is currently up 20% year-to-date, nearing a record high and poised for its best January-to-September performance since 1997. Optimism around a potential ‘soft landing’ has fueled this rally, alongside a recent 50 basis point rate cut by the central bank.
Overall, inflation in the U.S. is steadily nearing the Federal Reserve’s 2% annual target. Analysts suggest that the ongoing moderation in consumer prices could prompt further interest rate cuts to prevent a spike in unemployment. The personal consumption expenditures price index, a key inflation measure monitored by the Fed, increased by just 0.1% in the past month. This brings the 12-month inflation rate to 2.2%, down from 2.5% in July, marking its lowest level since February 2021. Moreover, Fed officials have seem to have shifted their focus from combating inflation to prioritizing support for a labor market showing signs of slowing. During their recent meeting, policymakers signaled the possibility of a half-percentage-point cut this year, followed by a full-point reduction in 2025.
That said, the current financial landscape reflects the Fed’s cautious strategy to engineer a soft landing for the economy—curbing inflation without inducing a recession. Gregory Daco, Chief Economist at EY-Parthenon, observes that the U.S. economy is gradually decelerating, with both consumers and businesses adopting more cautious spending behaviors due to a tightening labor market and rising costs. Although consumer spending hasn’t seen a sharp decline, Daco suggests that slower growth in disposable income could lead to more subdued spending in 2025. He projects consumer spending growth to slow to an average of 2.5% in Q4 2024, dropping further to 2% in 2025.
On another front, Mark Spitznagel, Chief Investment Officer and founder of Universa, believes the U.S. is on the brink of a significant downturn due to the high levels of debt and sustained high interest rates. “The clock is ticking, and we are entering black swan territory,” he told Reuters, warning that the recent “disinversion” of a key segment of the U.S. Treasury yield curve—a crucial recession indicator—signals an impending sharp downturn. Spitznagel anticipates a recession could hit as early as this year, prompting the Fed to slash rates aggressively from the current 4.75%-5% range and potentially returning to quantitative easing (QE), or bond buying.
Our Methodology
To compile our list of the best breakout stocks, we analyzed the holdings of the IBD Breakout Opportunities ETF and ranked them based on the number of hedge funds that initiated long positions in Q2 2024. From this group, we identified the top breakout stocks that are the most widely held by hedge funds.
At Insider Monkey, we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
A macro view of a gold mine, with miners hard at work in the foreground.
Agnico Eagle Mines Limited (NYSE:AEM)
Number of Hedge Fund Holders: 50
Agnico Eagle Mines Limited (NYSE:AEM), a key player in the Canadian gold industry, operates mining sites across Canada, Finland, Australia, and Mexico, along with exploration and development projects in the United States. The company adheres to a strategy of maintaining full exposure to fluctuating gold prices by avoiding forward gold sales.
In the second quarter of 2024, Agnico Eagle Mines Limited (NYSE:AEM) produced 0.9 million ounces of gold, bringing its total production for the first half of the year to 1.77 million ounces. This performance keeps the company on track to meet the higher end of its annual production forecast. With robust output and rising gold prices, Agnico Eagle’s revenue grew by 20.9% year-over-year in Q2, and by 21% year-over-year for the first half of 2024.
At the end of the second quarter of 2024, 50 hedge funds tracked by Insider Monkey held positions in Agnico Eagle Mines Limited (NYSE:AEM). The largest shareholder was Jean-Marie Eveillard’s First Eagle Investment Management, which owned 6.64 million shares, valued at approximately $434.95 million.
Alluvium Asset Management said the following regarding Agnico Eagle Mines (NYSE:AEM) in their second-quarter 2024 investor letter:
“Our gold miners had quite divergent performance, Agnico Eagle Mines Limited (NYSE:AEM) was up 11.4%, but Regis Resources was down 12.9%. They both provided quarterly updates. Regis reported business disruptions due to poor weather, but management maintained its output and cost guidance. It also announced the approval of two underground projects that will add around 25% to production levels from 2027, but they will cost circa AUD 150m. Agnico reported more positive results and reiterated guidance. We have revised our long-term gold price and exchange rate assumptions (which remain conservative). On our earnings based models we still view Regis as cheap and Agnico as expensive. But that ignores management, and, to a large extent, growth prospects. And when we consider those factors the equation looks decidedly more balanced. So despite Regis trading at an even larger discount to our valuation we have not bought more, and despite Agnico trading at an even larger premium to our valuation, we have not recently sold any. The Fund’s combined position in these gold miners is 6.6%.”
Overall AEM ranks 7th on our list of the breakout stocks to invest in. While we recognize the potential of AEM as an investment, we believe certain deeply undervalued AI stocks offer greater prospects for higher returns in a shorter period. If you’re seeking an AI stock with even more promise than AEM and trading at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.