We recently published a list of the 10 Best Canadian Stocks to Buy Under $10. In this article, we are going to take a look at why Kinross Gold Corporation (NYSE:KGC) is the best Canadian stock to buy under $10.
How are Canadian Stocks Performing?
The Canadian stock market had a positive third quarter, following a sluggish start earlier in 2024. The market was driven by domestic rate cuts and rebounding global markets. The BMO S&P 500 Index ETF, iShares Core S&P/TSX Capped Composite Index ETF, and iShares S&P/TSX 60 Index ET have surged over 33%, 20%, and 22% year-to-date, as of November 27.
If we talk about year-over-year headline inflation, it has cooled as per the Bank of Canada’s target rate of 2%. Hence, policymakers have cut rates four times consecutively and another 50 basis points cut is expected in December. The Bank of Canada’s benchmark lending rate stands at 3.75%, while economists are projecting a terminal interest rate of as low as 2%.
The managing director and head of macro strategy at Desjardins Group pointed out that the GST tax break from December 14 to February 15, 2025, will have a high fiscal multiplier, adding a noticeable boost to growth in the first half of 2025. The tax break is to increase consumer spending which has been severely impacted by interest rate increases and high debt levels since 2022. The tax break will allow consumers to buy essentials such as groceries, snacks, and kids’ clothing – all tax-free.
In the long run, the potential trade tariffs pose a wider threat to companies. The newly elected U.S. President Trump has vowed to impose a 25% tax on imports from Canada as well as Mexico. In 2023, the U.S. accounted for more than 75% of exports from Canada.
READ ALSO: Jim Cramer’s Latest Lightning Round: 11 Stocks to Watch and Jim Cramer on AMD and Other Stocks.
Canada’s Precious Metal and Mining Industry: The Real Deal
Some of the largest Canadian companies are involved in minerals and mining of rare earth metals, mainly engaged in gold and uranium exploration. Canada is also one of the largest producers of rare earth metals including Gold and Uranium. According to the World Gold Council, Canada was the fourth largest producer of gold with a total production of 192 tonnes in 2023. Are you interested in Gold Stocks to Buy Under $30? (Click Here)
In addition, Canada was the second largest Uranium producer in 2022, accounting for a total production of 7,351 tonnes, as per the World Nuclear Association. Cigar Lake was the largest operational highest-grade Uranium mine in northern Saskatchewan, Canada.
With that, let’s take a look at where Kinross Gold Corporation (NYSE:KGC) ranks among the best Canadian stocks to buy under $10.
A panoramic view of a gold mine, highlighting the company’s global mining operations.
Kinross Gold Corporation (NYSE:KGC)
Number of Hedge Funds Holders: 41
Share Price as of November 27: $9.80
Kinross Gold Corporation (NYSE:KGC) is one of the largest gold mining companies based out of Canada. The company has operations across the Americas, West Africa, and Russia. Kinross focuses on high-quality, low-cost gold development projects including the Great Bear project in Ontario, the Manh Choh project in Alaska, and the Lobo-Marte project in Chile, all driving its future growth and expansion.
In Q3, the company increased its operating margins by 14% compared to Q2. This helped the company with a record quarterly free cash flow of $415 million. The increase in cash flows has allowed the company to repay its debt, repaying $650 million out of the $1 billion term loan. Kinross Gold Corporation’s (NYSE:KGC) focus on cost-effective and high-quality gold production allows the company to generate strong cash flows.
In addition to the company’s strong quarterly performance, on November 19, Kinross Gold Corporation (NYSE:KGC) announced that it has further increased the size of its flagship White Gold project in west-central Yukon, Canada. The company’s latest update on the asset will have a significant increase in total gold ounces, including an 18.5% rise in inferred resources and a 4.3% increase in indicated resources. The indicated resource category will now comprise 1.2 million ounces of gold, while the inferred resource category will account for 1.11 million ounces of gold.
Overall, KGC ranks 1st on our list of the best Canadian stocks to buy under $10. While we acknowledge the potential of KGC as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than KGC but that trades 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.