Cassiar Gold Corp. (TSXV: GLDC, OTCQX: CGLCF)
Revitalizing the Cassiar Gold District in British Columbia, Canada
Nutrien (TSX:NTR) and Barrick Gold (TSX:ABX) have been the most well-known material stocks on the Toronto Stock Exchange over the past years.
While Nutrien’s business and earnings as a fertiliser producer been fairly stable due to the relatively low volatility in potash and fertiliser prices, Barrick Gold is making a ton of money in the bull market with gold prices repeatedly making ATHs.
So obviously there are reasons for Canadian investors to consider either of these stocks, or even hold both. But if you had to choose between the two, which stock would be a better addition to the portfolio right now?
Nutrien is better than Barrick Gold in some way because the former is a much more “stable” company than the latter. While Nutrien is exposed to the same commodity price risk as Barrick, Nutrien’s underlying commodity prices are generally less volatile than those of Barrick.
Nutrien’s revenues have climbed slowly but steadily over the past decade, from C$7.5 billion in 2014 to C$35.6 billion in fiscal 2024, with only a sudden spike in revenue growth in 2022, when fertiliser prices rocketed due to the Russia-Ukraine war, pushing the company’s sales to C$50 billion at one point.
Its revenues declined after the supply chain disruption ended. Nonetheless, the company’s 2023 revenues are still well above the C$37bn it generated in 2021 (up 9.5% in two years).
The situation at Barrick is quite different. As the price of gold and copper fluctuates wildly, so does Barrick’s revenue. The company has had two revenue declines in the last 10 years, one starting in 2020 and the other in 2015. This is a very typical pattern for gold companies, which are very vulnerable to commodity price risk. If the price of gold falls, gold producers like Barrick will see their revenues fall significantly as well.
Where Barrick Gold beats Nutrien is that Barrick is more profitable. In particular, gold prices have been performing very strongly over the past few years. Financial results show that Barrick Gold has achieved a 34% gross profit margin; a 25% EBIT (operating income) margin; a 13.2% net profit margin, a 7.7% free cash flow margin, and a 7% return on equity (ROE) over the past 12 months.
In contrast, Nutrien falls far short of Barrick Gold on the same profitability metrics, which is why if you have to choose between these two excellent TSX material stocks, it would be wiser to choose Barrick Gold.
