The U.S. stock market’s turbulence defined 2024, and gold (GCG25) shone brightly amid geopolitical tensions and voracious central bank buying. However, after Donald Trump’s November victory, gold’s rally faltered, with prices dipping as his inflationary policies - tariffs and tax cuts - clouded the Federal Reserve’s rate-cut trajectory.
But gold remains resilient, poised for modest 2025 gains, driven by persistent Asian demand, central bank de-dollarization, and geopolitical risks.
The popular currency hedge is once again approaching its October high of $2,826.3 an ounce, with gold futures climbing 26.6% in 2024 and cash gold's (GCY00) 33% rally eclipsing the S&P 500 Index’s ($SPX) YTD gains.
Amid this glittering momentum, gold miner AngloGold Ashanti (AU) has emerged as a standout, with shares up 59% over the past year. Its acquisition of Centamin and a 50% stake in the Sukari mine promise a free cash flow (FCF) surge, earning RBC Capital's "Outperform" upgrade.
AngloGold is shaping up to be more than just a miner. It is a wealth-generating powerhouse delivering value back to shareholders. This dividend-paying gold stock could be a wise buy for investors seeking stability in turbulent markets.
About AngloGold Ashanti Stock
AngloGold Ashanti, founded in 1944 and headquartered in Johannesburg, is a gold mining giant with a $10.8 billion market capitalization. Spanning nine countries and four continents, the company blends top-tier operations with strategic exploration. While gold is its heart, AngloGold also taps into value-rich mineral opportunities, positioning itself as a global force in mining.
AngloGold's shares have skyrocketed 45.3% on a year-to-date basis, surging past the broader SPX’s 27.6% gain during the same time frame. AU stock has also outperformed the iShares Global Gold Miners ETF’s (RING) 38% gain over the past 52 weeks and 30.1% return on a YTD basis.
Despite its strong performance, AU stock, priced at 9.99 times forward earnings, feels like a bargain as it is trading below not just its peers, but its own historical average. Even at 2.28 times sales, it is way below its five-year average of 12.04x, making it an attractive pick in a market full of high-priced players.
AngloGold’s Golden Dividend Boost
AngloGold’s strong earnings this year, so far, have translated into a 450% dividend increase in 2024. On Sept. 13, shareholders received an interim payout of $0.22 per share, up from last year's $0.04.
The company’s robust free cash flow and solid balance sheet set the stage for a forward annualized dividend of $0.44 per share, yielding 1.6%.
With a healthy payout ratio of 18.51%, AngloGold strikes a perfect balance between rewarding shareholders and retaining the flexibility to fuel future growth, making it a promising play for income-focused investors.
AngloGold Rises After Q3 Earnings Release
The South African gold mining stock rose 5% on Nov. 7, following AngloGold's Q3 earnings results. Gold income climbed 31% year-over-year to nearly $1.5 billion, and its EPS of $0.56 reflected a remarkable turnaround from last year's loss of $0.46 per share.
Gold production hit 657,000 ounces, with strong showings at its Obuasi, Siguiri, and Tropicana mines. For the first nine months of 2024, production held steady at 1.911 million ounces.
Net cash inflow from operating activities soared 121% year-over-year to $606 million, driven by higher gold prices and reduced restructuring costs. Free cash inflow reached $347 million, a huge leap from $20 million last year, while the FCF before non-sustaining capital expenditures came in at $408 million, up from $57 million in Q3 2023.
Moreover, AngloGold is gearing up for a solid fiscal 2024, with management targeting gold production between 2.65 million and 2.85 million ounces, while capital expenditure is anticipated to be between $1.1 billion and $1.4 billion.
Analysts tracking AngloGold are bullish, projecting the company to swing to a profit of $2.50 per share in fiscal 2024, with further bottom-line growth of 10% annually to $2.75 per share in fiscal 2025.
What Do Analysts Expect for AngloGold Ashanti Stock?
RBC has a bullish outlook on AngloGold, upgrading AU to "Outperform" last week with a price target of $31, up from $26. This follows the strategic acquisition of Centamin and AngloGold's 50% stake in the Sukari mine – a move set to significantly boost AngloGold’s FCF, a key factor for RBC’s optimism.
RBC’s analyst Josh Wolfson sees this as a game-changer, highlighting the acquisition as a natural fit, driving both net asset value and cash flow growth. With projected gold production of 2.9 million ounces and EBITDA of $3.8 billion, AngloGold’s high-margin profile stands out. This, paired with its upcoming capital return framework, is expected to keep it competitive, especially with a $1.5 billion FCF forecast at $2,600 per ounce gold prices.
Wall Street appears optimistic about AngloGold’s prospects. AU stock has a consensus “Moderate Buy” rating overall. Out of the four analysts offering recommendations for the stock, two recommend a “Strong Buy,” one suggests a “Moderate Buy,” and the remaining one analyst is playing it safe with a “Hold” rating.
The average analyst price target of $31.75 implies upside potential of 23.3% from the current price levels. The Street-high target of $34, raised by BMO Capital in August, suggests the gold mining stock could rally as much as 32%.
