Agnico Eagle and B2Gold Are 2 Gold Stocks to Watch for Big Gains

The past month or so hasn't been great for gold mining stocks, with gold prices correcting.

Investors are scaling back their bullishness on inflation-hedge gold, which shot to recent prominence after the Brexit.

Federal Reserve Chair Janet Yellen's remarks on interest rates have also created challenges for the sector.

That being said, investors may want to consider Agnico Eagle Mines (AEM) , though it isn't cheap, as well as analyst favorite B2Gold (BTG) .

Let's look at which stock is the best growth-and-safety opportunity.

Agnico Eagle Mines, with its recent favorable guidance, exploration catalysts and superior output blueprint, is a better buy than B2Gold.

Over the years, Agnico Eagle Mines has built a growing, high-quality and low-risk business. This has led the nearly 60-year-old company to deliver on growth expectations, generate stable operating cash flow and ensure a best-in-class pipeline of projects.

The company's plans to minimize financial and political risks -- a hazard for most gold miners -- are another plus.

For instance, Barrick Gold's Veladero mine in Argentina was suspended after a spill, and Goldcorp is struggling with a leak at a Mexican mine.

As Chief Executive Sean Boyd said in July, Agnico Eagle Mines is among the precious handful of companies that expects its output to be 30% to 40% higher five years from now.

Agnico Eagle Mines is also one of the few to raise its quarterly dividend to 10 cents a share from 8 cents after second-quarter earnings beat analyst estimates.

Finally, packed with an annual earnings growth forecast of 38% plus for the next five years, shares of Agnico Eagle Mines offer upside potential of about 11% over the next 12 months.

As for B2Gold, the stock lost more than 17% odd over the past 30 days, yet it is still up more than 168% year to date.

With four operating mines, one mine under construction and other exploration projects, a large part of B2Gold's future path is linked to the Fekola mine in southwest Mali, scheduled to commence production at the end of next year.

However, B2Gold is likely to post annual earnings share growth of 20% over the next five years, under-performing Agnico Eagle Mines' expected growth of more than 38% per year. Add to that negative return on assets and return on equity figures.

B2Gold has had meteoric revenue growth, rising to $554 million last year from $21 million in 2009 as an intermediate gold producer. But the company has had zero profits for the past two years, and free cash flow was negative for four years from 2012 to 2015.

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This article is commentary by an independent contributor. At the time of publication, the author held no positions in the stocks mentioned.

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