Gold prices hit all-time highs recently, driven by the anticipation of interest rate cuts later this year. The surge in bullion prices can also be attributed to the purchases made by central banks worldwide, led by China and India, which are buying to diversify their foreign exchange reserves from U.S. dollar to gold.
Gold’s future looks promising, bolstered by geopolitical tensions, the current inflationary environment, and its steadfast reputation as a safe-haven asset. This stability can provide a sense of security in uncertain times. Amid this backdrop, investors could consider buying quality gold stocks, such as Alamos Gold Inc. (AGI), Barrick Gold Corporation (GOLD), and Dundee Precious Metals Inc. (DPMLF).
Gold prices have fallen slightly from the peak due to easing tensions in the Middle East and signs that the Federal Reserve will keep interest rates higher for longer. However, the golden metal’s long-term prospects appear bright as central banks are expected to keep bolstering their bullion reserves amid geopolitical tensions and concerns about a global economic slowdown.
Moreover, Chinese consumers and its central bank are buying gold like there is no tomorrow. The People’s Bank of China’s (PBOC) holdings of the precious metal rose by 5t in March, taking the total to 2,262t and extending the purchasing streak to 17 months, its longest-ever run of purchases.
Ed Yardeni, the President of Yardeni Research, believes that if inflation returns, gold prices could soar through the end of 2025 and rise as high as $3,500 by the end of next year. Rosenberg Research’s David Rosenberg believes gold looks poised to hit $3,000 per ounce.
In light of these encouraging trends, let's look at the fundamentals of the three Miners - Gold stock picks, starting with the third in line.
Stock #3: Alamos Gold Inc. (AGI)
Headquartered in Toronto, Canada, AGI acquires, explores, develops, and extracts precious metals in Canada and Mexico. The company primarily explores gold deposits.
AGI’s trailing-12-month CAPEX / Sales of 34.10% is 354.2% higher than the industry average of 7.51%. Its trailing-12-month EBIT margin and net income margin of 31.09% and 20.52% are 176.5% and 296.5% higher than the industry averages of 11.24% and 5.18%, respectively.
AGI’s operating revenues and earnings before income taxes for the fiscal fourth quarter that ended December 31, 2023, stood at $254.60 million and $71.90 million, up 9.8% and 16.7% year-over-year, respectively. For the same quarter, its net earnings and earnings per share increased 16% and 20% from the year-ago quarter to $47.10 million and $0.12, respectively.
Street expects AGI’s revenue and EPS for the quarter ending June 30, 2024, to increase 11.9% and 33.3% year-over-year to $292.08 million and $0.20, respectively. The company surpassed consensus EPS estimates in each of the trailing four quarters and consensus revenue estimates in three of the trailing four quarters, which is impressive.
The stock has gained 22.1% over the past three months to close the last trading session at $14.76.
AGI’s robust prospects are reflected in its POWR Ratings. It has an overall B rating, equating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has a B grade for Sentiment and Quality. It is ranked #12 out of 42 stocks within the Miners - Gold industry. Click here to see the additional POWR Ratings for AGI (Growth, Value, Momentum, and Stability).
Stock #2: Barrick Gold Corporation (GOLD)
Headquartered in Toronto, Canada, GOLD explores, develops mines, produces, and sells gold and copper properties in Canada and internationally. The company also explores and sells silver and energy materials.
On March 20, GOLD announced that, based on the success of Kibali, which Barrick has built into Africa’s largest gold mine, the company was ready to invest in new gold and copper opportunities in partnership with the government of the Democratic Republic of Congo.
GOLD’s trailing-12-month EBITDA margin and levered FCF margin of 42.56% and 5.93% are 146.9% and 12.9% higher than the industry averages of 17.24% and 5.25%, respectively.
For the fiscal fourth quarter that ended December 31, 2023, GOLD’s revenues increased 6.9% quarter-over-quarter to $3.06 billion, while free cash flow stood at $136 million. For the same quarter, its adjusted net earnings and adjusted net earnings per share increased 11.5% and 12.5% from the previous quarter to $466 million and $0.27, respectively.
As of December 31, 2023, GOLD’s total current liabilities amounted to $2.36 billion, compared to $3.12 billion as of December 31, 2022.
Analysts expect GOLD’s revenue and EPS for the quarter ending June 30, 2024, to increase 14.5% and 21.4% year-over-year to $3.24 billion and $0.23, respectively. The company surpassed consensus EPS estimates in each of the trailing four quarters.
The stock has gained 5.8% over the past month to close the last trading session at $16.42.
GOLD’s POWR Ratings reflect its positive prospects. It has an overall B rating, equating to Buy in our proprietary rating system.
GOLD has a B grade for Growth and Quality. Within the same industry, it is ranked #9. To see the additional POWR Ratings of GOLD for Value, Momentum, Stability, and Sentiment, click here.
Stock #1: Dundee Precious Metals Inc. (DPMLF)
DPMLF, headquartered in Toronto, Canada, acquires, explores, develops, mines, and processes precious metals. It owns and operates a gold, copper, and silver mine.
DPMLF’s trailing-12-month gross profit margin of 53.05% is 85% higher than the industry average of 28.68%. Its trailing-12-month ROCE and ROTC of 17.22% and 10.95% are 154.7% and 109.5% higher than the industry averages of 6.76% and 5.23%, respectively.
DPMLF’s revenue and adjusted EBITDA for the fiscal fourth quarter that ended December 31, 2023, increased 23.3% and 36.7% year-over-year to $139.30 million and $79.63 million, respectively. For the same quarter, its adjusted net earnings and adjusted net earnings per share stood at $55.47 million and $0.31, up 66.5% and 72.2% from the prior-year quarter, respectively.
For the year ending December 31, 2024, DPMLF’s revenue is expected to increase 5.2% year-over-year to $546.90 million. The stock has gained 22.3% over the past three months, closing the last trading session at $7.55.
DPMLF’s POWR Ratings reflect this promising outlook. It has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
DPMLF has an A grade for Value and Quality. Within the Miners - Gold industry, it is ranked first. To see DPMLF’s Growth, Momentum, Stability, and Sentiment ratings, click here.
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GOLD shares fell $16.42 (-100.00%) in premarket trading Tuesday. Year-to-date, GOLD has declined -8.74%, versus a 5.82% rise in the benchmark S&P 500 index during the same period.
About the Author: Neha Panjwani
From her school days, Neha harbored a profound fascination for finance, a passion that steered her toward a career as an investment analyst following the completion of her bachelor's degree in commerce. Currently enrolled in the CFA program, Neha is dedicated to further enriching her comprehension of investment fundamentals. Neha's primary objective is to aid retail investors in discerning optimal investment opportunities by diligently evaluating crucial aspects of financial instruments, with a primary focus on stocks and ETFs. Her commitment lies in empowering individuals to make informed and strategic investment decisions in the dynamic world of finance.
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