Franco-Nevada (FNV) touts itself as “The Gold Investment that Works,” and this gold royalty and streaming company has 377 assets that are mostly (210) precious metals-oriented, with other mining assets (84) and oil & gas (83) rounding out its portfolio, explains Mike Cintolo, editor of Cabot Top Ten Trader.

The company is well diversified by geography, commodity, revenue type and stage of project, although it aims to get 80% of its revenue from precious metals like gold, silver and platinum group metals.

The company enjoyed a 38% bump in revenue in 2016, which slowed to 11% growth in 2017. During the first three quarters of 2018, revenue has been essentially flat. Earnings were up 36% in Q1 and 16% in Q2, but slowed by 3% in Q3.

Franco-Nevada doesn’t operate mines or develop products, rather its business model is to own royalty rights and streaming rights that give it an advantage over gold ETFs (ability to leverage to gold prices and generate dividend yield) and over mine operators (no capital costs and no operating costs).

And with five straight quarters of after-tax profit margins in excess of 30% and a dividend that yields 1.3%, the company’s superiority seems quite plausible.

Analysts see earnings growing by 9% this year and 9% in 2019, but that can change in a hurry based on metals prices. If you’re looking for a way to get some gold exposure into your portfolio, Franco-Nevada looks like a good choice.

The stock has been in a long-term uptrend, but with considerable shifts in fortune along the way. The stock traded flat for three year from 2013 through 2015, then spiked from $40 to $77 in the first half of 2016. A pullback to $58 in late 2016 was followed by a rally to 84 in late November 2017.

FNV slipped to 57 again last September, but has now rallied strongly to above $70 again, making it far stronger than most gold stocks. Look to buy in on dips toward $70 and use a stop around $64 for protection.

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