My Top Pick for growth investors in 2016 is the second-largest of the gold royalty companies (approximately $2.4 billion market cap), notes Adrian Day, editor of Global Analyst.

Although the leader Franco-Nevada (FNV)—which remains a favorite of mine—is three times as large, more diversified, and has a lower risk profile with a rock-solid balance sheet, Royal Gold (RGLD) remains a conservative way to gain exposure to the gold market.

Royal Gold has lots of growth potential in coming years. It is also less expensive than Franco and a stronger buy at today’s prices with more near term upside.

Royal’s stock is particularly weak right now because of a recent loss, which surprised the market.  The loss, however, was due to one-off events, including the timing of sales from a new stream on the giant Pueblo Viejo mine owned by Barrick (ABX).

There were also some other issues, including the suspension of operations at one mine on which Royal holds a royalty.

It is relatively small for Royal and will be mitigated to some extent in the near term by the processing of already-mined ore.

Other operations were strong, including the Mt. Milligan royalty, which is meaningful for Royal.

The company has certainly addressed the concern that its royalty stream was too concentrated, with Mt. Milligan representing almost 50% at one point.

In the last quarter it spent over $1.3 billion on four new royalties and streams (about half of that on Puerto Veijo), three of which are cash-flowing this year.

The debt is manageable—just 11% of assets—and the company—though not ruling out further acquisitions—will focus on using its cash flow to reduce its debt in the near term.

At the current level, Royal is an extremely strong buy and should be bought aggressively and a suitable buy for more conservative investors wanting exposure to the gold sector.

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