Despite market fluctuations since February 2020, FANG stocks (Facebook, Amazon, Apple, Netflix and Google) have held up, but gold mining stocks have actually done better.
So far this year, returns for Facebook Inc. (Nasdaq: FB), Amazon.com Inc. (Nasdaq: AMZN), Apple Inc. (Nasdaq: AAPL), Netflix Inc. (Nasdaq: NFLX) and Alphabet Inc. (Nasdaq: GOOG) have performed well.
So how much better have gold miners done?
Gold mining stocks including Barrick Gold Corp. (NYSE: GOLD), Agnico-Eagle Mines Ltd. (NYSE: AEM) and Newmont Mining Corp. (NYSE: NEM) have tripled the FANG stocks’ returns, according to Felder Investment Research’s Jesse Felder.
FANG Stock Performance
Since falling to $138 per share on March 18, Facebook has rebounded nicely to the tune of a 54% gain.
However, its low was not near its previous low of $124 set back in December 2018.
Apple shares were initially battered by the coronavirus outbreak thanks to the company’s reliance on Chinese producers and sales. However, it has moved up nearly 45% off a low of $216 (intraday) set back on March 23.
Amazon didn’t reach its lows until mid-March 2020 but has gained 44% since hitting that bottom.
A big FANG stock winner during the coronavirus pandemic has been Netflix, which is up nearly 50% from its mid-March 2020 low
Alphabet Inc. has bounced back from a low of $1,056 to around $1,391 — a 32% gain.
In all, FANG stocks have done a solid job rebounding from the overall stock market crash from February and March.
Gold Mining Stock Performance
Barrick Gold did drop in March 2020, but not nearly as much as other companies in the stock market. In fact, its bounce is around 80% to reach a new 52-week high of around $26 per share.
Fellow gold mining company Agnico-Eagle Mines also dropped during March but has since rebounded by nearly 80% to also hit a new 52-week high around $64 per share.
Newmont Mining suffered only a slight drop in March but has also nailed a 52-week high by bouncing nearly 64% in short order.
Why Gold Mining Stocks Are Outperforming FANG
Felder said one of the big reasons why gold mining stocks have done so much better is because of the rising price of gold.
After reaching about $1,475 an ounce against the U.S. dollar in March, gold prices have jumped more than 15% to around $1,700 today.
That has helped gold mining companies see larger gains for their share prices as investors pour into safe havens to guard against market fluctuations.
“Combine this with the fact that these stocks were trading at significant discounts to their historical valuations, and you have a recipe for an explosion higher in prices,” Felder said.
You also have to consider FANG stocks remain somewhat overvalued.
He said FANG stocks were trading near their highest valuations two years ago, but revenue growth “looks to decelerate even faster to record lows.”
“At the same time, valuations have recently risen, leaving significant gaps that represent pockets of risk for investors in these names today,” Felder said.
Gold Mining Stocks In Your Portfolio
On March 6, we recommended three gold stocks to buy to help investors capitalize on the pending market downturn and upturn for gold.
So far, those picks have been solid.
Barrick Gold has jumped more than 38% since then, including a $0.07-per-share dividend payment.
Newmont Corp. has increased more than 40% since we recommended it on top of offering a $0.14-per-share dividend.
Our third recommendation, Franco Nevada Corp. (NYSE: FNV), has jumped nearly 30% in addition to providing a $0.25-per-share dividend for investors.
Another Piece of Evidence on Gold Mining Performance
In an effort to find another piece of evidence to backstop gold mining stocks outperforming FANG stocks, we looked at two exchange-traded funds.
To represent FANG stocks, we looked at the performance of the iShares North American Tech ETF (NYSEARCA: IGM). For gold mining, we examined the Gold Miners Vaneck ETF (NYSEARCA: GDX) ETF.
As you can see in the chart, GDX has jumped more than 84% since reaching a low in March 2020. Conversely, IGM — which 37% of its holdings are FANG stocks — only rose 32%.
For the long term, gold prices could go even higher, giving gold mining stocks an even bigger advantage over the popular FANG stocks — especially as FANG companies continue to press their overvalued status.
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