Gold prices recently hit a record high, owing to the recent bets on federal reserve interest rate cuts and geopolitical tensions fueling the market. Therefore, investors could elevate their portfolio performance by investing in fundamentally robust gold stocks Alamos Gold Inc. (AGI), Barrick Gold Corporation (GOLD), and Harmony Gold Mining Company Limited (HMY) now.
Gold prices recently reached record-breaking highs, trading currently above $2,100 per ounce. This surge is likely driven by potential Federal Reserve interest rate cuts and central banks' persistent purchase of bullion in record amounts.
Citi’s North America head of commodities, Aakash Doshi, anticipates that gold prices could rise to $2,300 per ounce in the second half of 2024, especially given the expectations of rate cuts in that period.
The jewelry sector, which abundantly uses gold, is driven by high demand during festivals and weddings in nations like China and India, presenting growth prospects for the gold market. In the U.S., the adoption of gold wedding bands, influenced by Western European culture, boosts demand and fosters market growth. Consequently, the global gold mining market is predicted to reach $260 billion by 2030, growing at a CAGR of about 3.5%.
Furthermore, the robust demand for tangible gold is fueled by its allure as a "safe-haven asset," which draws investors seeking diversification amid less-than-stellar returns from other asset types.
To that end, let’s examine the fundamentals of the three stocks to buy in the Miners - Gold industry, beginning with the third choice.
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 and silver deposits.
On February 28, AGI’s Board of Directors declared a quarterly dividend of $0.03 per common share, payable on March 28, 2024. The company has paid dividends for 15 consecutive years, and $334 million has been returned to shareholders through dividends and share buybacks, including $39 million in 2023.
AGI pays an annual dividend of $0.10 per share, which translates to a dividend yield of 0.74% on the current share price. Its four-year average yield is 0.95%. Over the past three and five years, AGI’s dividend payments have grown at CAGRs of 10.1% and 38%, respectively.
AGI’s trailing-12-month CAPEX/Sales of 34.10% is 347.9% higher than the industry average of 7.61%. Its trailing-12-month EBIT and net income margins of 31.09% and 20.52% are 181.2% and 308% higher than the industry averages of 11.06% and 5.03%, respectively.
For the fiscal fourth quarter that ended December 31, 2023, AGI’s operating revenues and earnings before income taxes 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.
The Street expects AGI’s revenue and EPS for the fiscal first quarter ending March 2024 to increase 8.2% and 16% year-over-year to $272 million and $0.13, 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 23.9% over the past year to close the last trading session at $13.62. Over the past nine months, it has gained 16%.
AGI’s solid fundamentals are reflected in its POWR Ratings. The stock 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.
The stock has a B grade for Sentiment and Quality. Within the Miners - Gold industry, it is ranked #11 out of 43 stocks.
To see additional POWR Ratings for Growth, Value, Momentum, and Stability for AGI, click here.
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 15, GOLD paid a dividend of $0.10 per share to its shareholders for the fiscal fourth quarter of 2023. The company pays an annual dividend of $0.40 per share, which translates to a dividend yield of 2.55% on the current share price. Its four-year average yield is 2.79%. GOLD’s dividend payments have grown at CAGRs of 6.6% and 16.1% over the past three and five years, respectively.
GOLD’s trailing-12-month CAPEX/Sales of 27.08% is 255.7% higher than the industry average of 7.61%. Its trailing-12-month EBIT and net income margins of 21.66% and 11.16% are 95.9% and 121.9% higher than the industry averages of 11.06% and 5.03%, 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.
Street expects GOLD’s revenue and EPS for the fiscal first quarter ending March 2024 to increase 7.1% and 35.5% year-over-year to $2.83 billion and $0.19, respectively. The company surpassed consensus EPS estimates in each of the trailing four quarters.
The stock has gained marginally intraday to close the last trading session at $15.81. Over the past month, it has gained 7.2%.
GOLD’s robust prospects are reflected in its POWR Ratings. The stock 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 #8.
Beyond what we’ve stated above, we have also rated the stock for Value, Momentum, Stability, and Sentiment. Get all ratings of GOLD here.
Stock #1: Harmony Gold Mining Company Limited (HMY)
Headquartered in Randfontein, South Africa, HMY explores, extracts, and processes gold. The company explores uranium, silver, copper, and molybdenum deposits.
HMY’s Board approved an interim gross cash dividend of 7.61 cents per ordinary share for the six months that ended December 31, 2023, payable to the registered shareholders on April 15, 2024. The company pays an annual dividend of $0.12 per share, translating to a dividend yield of 1.49% on the current share price. Its four-year average yield is 0.98%.
HMY announced that total gold production for the six months that ended December 31, 2023, was between 820,000 ounces and 835,000 ounces, an increase of around 12% to 14% compared to the six months that ended December 31, 2022.
HMY’s trailing-12-month CAPEX/Sales of 13.69% is 79.8% higher than the industry average of 7.61%. Its trailing-12-month EBIT and net income margins of 21.29% and 15.50% are 92.6% and 208.2% higher than the industry averages of 11.06% and 5.03%, respectively.
For the six months that ended December 31, 2023, HMY’s revenue and gross profit stood at $1.68 billion and $462 million, respectively, up 25.2% and 165.5% year-over-year.
For the same period, its net profit for the period attributable to owners of the parent and earnings per ordinary share increased 197.2% and 200% from the year-ago period to $318 million and 51 cents, respectively.
The company projects to produce between 1.38 million and 1.48 million ounces of gold and gold equivalents for the fiscal 2024 at an all-in-sustaining costs (AISC) of below R975,000/kg ($51,956.10/kg).
Street expects HMY’s revenue for the fiscal year ending June 2024 to increase 19.1% year-over-year to $3.14 billion.
The stock has gained 111.3% over the past year to close the last trading session at $7.88. Over the past nine months, it has gained 89.4%.
HMY’s POWR Ratings reflect its positive prospects. The stock has an overall B rating, equating to Buy in our proprietary rating system.
HMY has an A grade for Growth and a B for Value and Quality. Within the same industry, it is ranked #5.
Click here for the additional POWR Ratings for HMY (Momentum, Stability, and Sentiment).
What To Do Next?
43 year investment veteran, Steve Reitmeister, has just released his 2024 market outlook along with trading plan and top 11 picks for the year ahead.
GOLD shares fell $0.08 (-0.51%) in premarket trading Friday. Year-to-date, GOLD has declined -11.38%, versus a 10.21% 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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