Kirkland Lake Gold (KL-T)

(A Top Pick Sep 11/20, Down 25%) Has extremely high amounts of gold in Australia. They bought Detour Gold in Canada which added lots of inventory. Price target of $80. Gold has come off its highs.

A core intermediate gold producer. They own the largest Canadian gold mine and have a reputation for running high-grade mines like Fosterville in Australia. Their Detour acquisition was meant to stabilize their production base. He believes in management. It's about generating strong free cash flow to fund their new shaft, the Macassa Mine, which is on schedule and offsetting production loss from Fosterville through 2023. KL produces 1.4 million ounces per year. It has a solid balance sheet, but is getting over near-term issues from owning the largest Canadian mine. His go-to company in gold.

(A Top Pick Jul 06/20, Up 4%) It's an asset-heavy business which won't fare as well in inflationary times that we are entering. He prefers asset-lite companies and in this space prefers royalty plays like Franco-Nevada. But KL is the best-run gold company out there, with fine managers. His position is smaller now. KL does hold a 7-8% free cash flow yield vs. 2-3% among its peers.

Inflation expectations are building. Though the relation between inflation and gold is questionable, people favour hard assets with retention of value. Some exposure to gold is good, usually around 2-3%. KL's purchase of Detour Gold was brilliant. Well managed, but he prefers companies with many different projects.

KL-T vs. ABX-T. He would prefer KL-T as it has been hit so hard. You are getting the cash and the good balance sheet.

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. At 12x earnings, it is very cheap. A good risk-reward play. The dividend is growing fast and good growth is expected at 17% EPS growth for this year. 1B in cash and a very strong balance sheet. It has better margins than AEM. Unlock Premium - Try 5i Free

Billy Kawasaki’s Insights - Billy’s most-liked answers from 5i Research. The sector has been weak and the company is very cheap. The balance sheet is very strong and production is set to increase. There is a lot of flexibility for the company if it decides to make acquisitions. Unlock Premium - Try 5i Free