On Monday, gold prices rose as the greenback and U.S. treasury yields retreated. The price of spot gold rose 0.8% to $1,788.39 per ounce. On the other hand, the market is in anticipation of the consumer price index (CPI) report for July. After the shocking uptick in inflation numbers to the decades-high 9.1% in June, economists predict a 0.2% increase in July to an overall CPI of 8.7%.
Gold’s appeal has taken a hit due to policy tightening. However, geopolitical tensions have offered support to the yellow metal, mitigating the Fed’s aggressive rate hike. According to Peter Schiff, CEO of Euro Pacific Capital, real assets like gold might thrive in an inflationary environment.
Given this backdrop, we think the fundamentally strong gold stocks Centerra Gold Inc. (CGAU), B2Gold Corp. (BTG), and Gold Resource Corporation (GORO) might help one hedge against inflation.
Centerra Gold Inc. (CGAU)
CGAU operates as a gold mining company that acquires, explores, and develops gold and copper properties in North America and globally. The company’s principal project includes the 100% owned Mount Milligan gold-copper mine in British Columbia. It is headquartered in Toronto, Canada.
On August 4, CGAU announced the publication of its ESG report. The company reported greenhouse gas emissions intensity from its two operations, the Mount Milligan Mine and the Öksüt Mine, to be below the industry average. CGAU also reported increased dependency on renewable energy at the Mount Milligan Mine.
For the fiscal first quarter ended March 31, CGAU’s revenue increased 30.5% year-over-year to $295.22 million. Adjusted net earnings from continuing operations and adjusted net earnings from continuing operations per common share came in at $56.40 million and $0.19, up 100% and 90% from the prior-year quarter.
The consensus EPS estimate for the fiscal quarter ending September 2022 of $0.30 reflects a rise of 150% from the prior-year quarter.
The stock has gained 5.7% over the past month and 2.1% intraday to close its last trading session at $6.32.
CGAU’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
CGAU has a Quality grade of A and a Growth and Value grade of B. In the 34-stock Miners – Gold industry, it is ranked #2. Click here to see the additional POWR Ratings for CGAU (Momentum, Stability, and Sentiment).
B2Gold Corp. (BTG)
BTG, based in Vancouver, Canada, is a gold producer primarily operating in three mines in Mali, the Philippines, and Namibia. The company also holds interests in Calibre Mining Corp. and BeMetals Corp.
On June 8, BTG declared a second-quarter dividend of $0.04 per common share, which was payable to shareholders on June 29. This reflects upon the company’s cash generation and shareholder return ability.
On May 26, BTG announced that it had entered into a definitive Scheme Implementation Agreement with Oklo Resources Limited to acquire 100% of the fully paid ordinary shares of Oklo. The acquisition is expected to provide BTG with landholding in greenstone belts in Mali, West Africa, which include Oklo’s flagship Dandoko Project.
BTG’s gold revenue increased 5.2% year-over-year to $381.99 million in the fiscal second quarter ended June 30. Cash and cash equivalents balance rose 53.5% from the prior-year period to $586.69 million. Cash provided by operating activities came in at $124.88 million, up significantly from its negative year-ago value.
Street EPS estimate for the fiscal year 2022 of $0.37 indicates a 2.8% year-over-year improvement. Likewise, Street revenue estimate of $1.85 billion for the same year reflects a rise of 4.7% from the prior year.
BTG’s stock has gained 5.1% over the past month and 2.3% over the past five days to close its last trading session at $3.50.
BTG has a B grade for Value and Quality. It is ranked #6 in the Miners – Gold industry. To see the additional POWR Ratings for Growth, Momentum, Stability, and Sentiment for BTG, click here.
Gold Resource Corporation (GORO)
GORO explores, develops, and produces gold and silver projects in the United States and Mexico. The company’s principal asset is the 100% owned Back Forty project. It also explores copper, lead, and zinc deposits.
On July 28, GORO declared a $0.01 per common share for the third quarter of 2022, payable to shareholders on September 30. This reflects upon the shareholder return ability of the company.
For the fiscal second quarter of 2022, GORO’s total net sales increased 20.2% year-over-year to $37.06 million. Net income and EPS came in at $2.63 million and $0.03, up 104.7% and 50% from the same period the prior year.
The consensus EPS estimate of $0.12 for the fiscal year 2022 indicates a 9.1% year-over-year increase. The consensus revenue estimate for the same year of $147.62 million reflects an improvement of 17.9% from the prior year.
The stock has gained 21.8% year-to-date and 20.3% over the past month to close its last trading session at $1.90.
According to POWR Ratings, GORO has a B grade for Value and Sentiment. It is ranked #5 in the same industry.
In addition to the POWR Rating grades we’ve stated above, one can see GORO ratings for Growth, Momentum, Stability, and Quality here.
CGAU shares were trading at $6.31 per share on Tuesday morning, down $0.01 (-0.16%). Year-to-date, CGAU has declined -16.84%, versus a -12.83% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.
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