Gold is widely considered a safe-haven asset, given its ability to remain a reliable store of value. Despite a relatively slow start to the new year, after hitting a record annual price in 2023, analysts expect the precious metal to achieve another record in 2024, driven by enhanced geopolitical instability, hopes of lower interest rates, and monetary uncertainty.
Hence, fundamentally sound gold stocks Alamos Gold Inc. (AGI), Centerra Gold Inc. (CGAU), Centamin plc (CELTF), and Dundee Precious Metals Inc. (DPMLF) could be worth buying now for substantial gains.
Gold prices soared significantly in the last few months of 2023, fueled by increased central bank purchasing and rising investor concerns over the escalating geopolitical tensions due to the Israel-Hamas and Russia-Ukraine conflicts. Further, a declining U.S. dollar and expectations of rate cuts by the Fed drove gold prices, which hit a record high of $2,135.39/oz in December.
After increasing the Fed’s benchmark short-term rate to a 22-year high of 5.25%-5.5%, policymakers on the Federal Open Market Committee (FOMC) indicated at least three rate cuts this year, thanks to a slower pace of inflation. With gold prices hovering around $2,000/oz, another bullish run is anticipated for the yellow metal as interest rates begin to fall.
“Across all metals, we have the highest conviction on a bullish medium-term forecast for both gold and silver over the course of 2024 and into the first half of 2025, though timing an entry will continue to be critical,” said Gregory Shearer, Head of Base and Precious Metals Strategy at J.P. Morgan.
Shearer added, “At the moment, gold still appears quite rich relative to underlying rates and foreign exchange (FX) fundamentals, and still looks vulnerable to another modest retreat in the near-term, as Fed rate cut expectations are now running earlier than our forecasts.”
In addition to imminent interest rate cuts and increased geopolitical instability, central banks were a primary driver of gold prices last year and will continue to be in 2024. J.P Morgan Research estimates global purchases by the central bank for the year to hit about 950 tonnes, with China being a significant buyer.
According to J.P. Morgan, gold prices are expected to peak at $2,300/oz in 2025. This forecast assumes the Fed will deliver 125 basis points of rate cuts over the second half of 2024, pushing bullion prices to new nominal highs.
Moreover, Joni Tevas, precious metals strategist at UBS, expects gold prices to hit $2200/oz by the end of 2024. “We are expecting gold to be pushed higher by a Fed easing. Also this comes with a weaker dollar,” Teves said.
Investors’ interest in gold stocks is evident from the SPDR Gold Shares ETF’s (GLD) 8.5% gains over the past year.
In light of these encouraging trends, let's look at the fundamentals of the four best Miners - Gold stocks, beginning with number 4.
Stock #4: Alamos Gold Inc. (AGI)
Based in Toronto, Canada, AGI engages in the acquisition, development, and extraction of precious metals. It mainly explores for gold and silver deposits. The company holds 100% interest in the Young-Davidson mine and Island Gold mine located in Ontario, Canada; the Mulatos mine situated in Sonora, Mexico; and the Lynn Lake project located in Manitoba, Canada.
On January 15, 2024, AGI entered a definitive agreement under which Alamos will acquire all the issued and outstanding shares of Orford Mining Corporation (ORM). This acquisition will consolidate Alamos’ existing ownership of Orford shares, through which the company will add to the highly prospective Qiqavik Gold Project, situated in Quebec, Canada.
In addition, Alamos will acquire interests in various exploration stage critical mineral and gold projects in Quebec, including West Raglan, the Joutel Properties, and Nunavik Lithium. This strategic acquisition of Orford aligns with AGI’s strategy of building out a pipeline of high-quality, long-term projects to complement its near-term organic growth projects in Canada.
On November 9, 2023, AGI announced outstanding results from its near-mine and regional exploration drilling program at Island Gold. The underground exploration drilling continues to extend high-grade gold mineralization across the Island Gold Deposit in the E1E and C-Zones and adjacent wall and footwall structures close to existing underground infrastructure.
Alamos finished 2023 with another solid quarter, achieving the top end of its increased annual guidance (515,000-530,000) with a record production of 529,300 ounces of gold. This represents a 15% increase from 2022, driven by low-cost growth from La Yaqui Grande. It sold 526,257 ounces of gold at an average realized price of $1,944 per ounce for record revenues of $1 billion.
AGI ended the year 2023 with nearly $225 million of cash and cash equivalents, an increase from $130 million at the end of 2022. Also, the company remains debt-free.
For the third quarter that ended September 30, 2023, AGI’s operating revenues increased 19.9% year-over-year to $256.20 million. Its earnings from operations grew 176.3% from the year-ago value to $82.60 million. The company’s adjusted net earnings and adjusted EPS rose 102.6% and 100% year-over-year to $54.50 million and $0.14, respectively.
Analysts expect AGI’s revenue for the fourth quarter (ended December 2023) to grow 12.8% year-over-year to $261.48 million. The company’s EPS for the same period is expected to increase 33.8% year-over-year to $0.12. Moreover, the company surpassed the consensus EPS estimates in all four trailing quarters, which is impressive.
AGI’s stock has gained 8.1% over the past six months and 18.4% over the past year to close the last trading session at $12.31.
AGI’s robust outlook is reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
AGI has a B grade for Sentiment, Growth, and Quality. It is ranked #11 out of 41 stocks within the Miners - Gold industry.
In addition to the POWR Ratings I’ve highlighted, you can access AGI’s Value, Momentum, and Stability ratings here.
Stock #3: Centerra Gold Inc. (CGAU)
Headquartered in Toronto, Canada, CGAU is a gold mining company that engages in the acquisition, exploration, development, and operation of gold and copper properties. It explores gold, copper, and molybdenum deposits. Its flagship projects include the 100% owned Mount Milligan gold-copper mine in British Columbia, Canada, and the Öksüt Gold Mine located in Turkey.
On November 3, 2023, CGAU announced that the Toronto Stock Exchange (TSX) acceptance of renewed normal course issuer bid (NCIB) to purchase for cancellation up to an aggregate of 18,293,896 common shares for the period beginning November 7, 2023, and ending on November 6, 2024.
These shares represent about 8.48% of Centerra’s total issued and outstanding common shares, or 10% of the public float. The company believes that the NCIB will provide it with a flexible tool to deploy a portion of its cash balance in accordance with its capital allocation framework.
On October 31, CGAU announced a quarterly dividend payment of C$0.07 ($0.05) per common share – nearly C$15 million ($11.10 million). The dividend was paid on November 29, 2023, to shareholders of record as of November 15, 2023. Its annual dividend of $0.20 translates to a yield of 3.80% at the prevailing share price. Its four-year average dividend yield is 2.82%.
CGAU’s revenue increased 92.1% year-over-year to $343.89 million in the third quarter that ended September 30, 2023. Its earnings from mine operations rose 251.5% year-over-year to $114.60 million. Its adjusted net earnings were $44.40 million, or $0.20 per share, compared to an adjusted net loss of $15.90 million, or $0.06 per share, in the prior year’s quarter, respectively.
For the fourth quarter that ended December 2023, Street expects CGAU’s revenue to increase 66.7% year-over-year to $347.13 million. Further, the company’s revenue and EPS for the fiscal year 2024 are estimated to grow 2.3% and 1,772.8% from the prior year to $1.13 billion and $0.52, respectively.
Additionally, CGAU has surpassed the consensus revenue estimates in each of the trailing four quarters.
CGAU’s shares have declined 6% over the past month to close the last trading session at $5.26.
CGAU’s POWR Ratings reflect its promising prospects. The stock has an overall grade of B, equating to a Buy in our proprietary rating system.
CGAU has an A grade for Growth and a B for Value and Quality. It is ranked #6 of 41 stocks within the Miners - Gold industry.
To see the other ratings of CGAU for Sentiment, Momentum, and Stability, click here.
Stock #2: Centamin plc (CELTF)
CELTF, together with its subsidiaries, is engaged in the exploration, mining, and development of precious metals in Egypt, Burkina Faso, Côte d'Ivoire, Jersey, the United Kingdom, and Australia. The company’s flagship asset is the Sukari Gold Mine project, which covers an area of nearly 160 square kilometers located in the Eastern Desert of Egypt.
On January 9, 2024, CELTF announced encouraging results of its maiden drill programme on the company’s Eastern Desert Exploration (EDX) landholding in Egypt. Its EDX blocks comprise 3,000 km2 of greenfield exploration tenements in Egypt’s Nubian Shield, a highly prospective geological belt that has not been explored using modern exploration methods.
The company further provided an update on the expected exploration programme for 2024. It includes delineating potential resources and drill targets in Egypt as part of its growth strategy, which has already raised pre-depletion Group reserves by 3.5Moz over the last three years.
On October 12, CELTF announced Sukari’s new life of mine plan that reestablishes it as a world tier-one gold asset. The plan forecasts long-term production above 500,000 ounces per year at all-in sustaining costs below $1,000 per ounce, underscoring the company’s commitment to maximizing free cash flow generation.
The new plan is not only a substantial improvement on what was priorly published, but it incorporates reduced operational risk and delivers enhanced carbon abatement. It also underpins CELTF’s strategy to optimize the value of Sukari as the foundation for growth and diversification with stakeholder returns.
In 2023, Centamin delivered another solid performance, underscored by its enhanced safety results. The company achieved 9.5 million hours worked at the Sukari gold mine with zero lost time injuries (LTIs). Its fourth-quarter gold production was 128,127 ounces, totaling 450,058 produced for 2023.
In addition, CELTF’s revenue was $265 million and $892 million for the fourth quarter and fiscal year 2023, respectively. The company’s cash and liquid assets stood at $153 million as of December 31, 2023, and total liquidity was $303 million.
For the fiscal year ending December 2024, the consensus revenue estimate of $952.89 million indicates an improvement of 7.6% year-over-year. Shares of CELTF have gained 12.6% over the past three months and 3.1% over the past six months to close the last trading session at $1.21.
CELTF’s robust prospects are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
CELTF has a B grade for Value, Growth, Quality, and Stability. It is ranked #3 out of 41 stocks within the Miners - Gold industry.
To access the other CELTF ratings for Momentum and Sentiment, click here.
Stock #1: Dundee Precious Metals Inc. (DPMLF)
DPMLF engages in the acquisition of mineral properties and exploration, development, mining, and processing of precious metals. It operates a gold, copper, and silver mine located east of Sofia, Bulgaria; a gold mine located in southeastern Bulgaria, near the town of Krumovgrad; and a custom smelter situated in Tsumeb, Namibia. It is based in Toronto, Canada.
On January 24, 2024, DPMLF filed a technical report for its Čoka Rakita gold project in Serbia. The report’s purpose was to support the maiden Mineral Resource Estimate (MRE) for the Čoka Rakita gold project in eastern Serbia, as previously disclosed in the company’s news release dated December 11, 2023.
DPMLF, on December 11, announced a maiden MRE of 1.78 million ounces for its Čoka Rakita gold project, where DPMLF announced a high-grade discovery in January 2023. The Inferred MRE comprises gold within 9.79 million tonnes at a grade of 5.67 g/t for 1.78 million ounces of gold.
The initial MRE marks a significant milestone for DPMLF’s future growth and confirms Čoka Rakita’s potential as an attractive, high-quality gold project.
On December 18, 2023, DPMLF announced an acquisition of Osino Resources Corp. (OSI). This acquisition will add Osino’s high-quality, long-life Twin Hills open-pit gold project and an extensive exploration portfolio in Namibia to DPM’s existing portfolio of assets.
For the third quarter that ended September 30, 2023, DPMLF’s revenue increased 4.9% year-over-year to $135 million. Its earnings before income taxes were $34.50 million, up 164% year-over-year. Its adjusted net earnings and adjusted earnings per share came in at $27.13 million and $0.15, increases of 7.3% and 15.4% from the prior year’s quarter, respectively.
Furthermore, the company’s free cash flow rose 3.2% year-over-year to $44.61 million. Its current assets stood at $733.31 million as of September 30, 2023, compared to $610.92 million as of December 31, 2022.
Analysts expect DPMLF’s revenue for the fiscal year (ended December 2023) to increase 12.1% year-over-year to $638.70 million. The stock has plunged marginally over the past year to close the last trading session at $6.15.
DPMLF’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
DPMLF has an A grade for Quality and Value. The stock also has a B grade for Stability. It is ranked #2 among 42 stocks within the Miners - Gold industry.
Click here for the additional POWR Ratings for DPMLF (Growth, Momentum, and Sentiment).
What To Do Next?
Discover 10 widely held stocks that our proprietary model shows have tremendous downside potential. Please make sure none of these “death trap” stocks are lurking in your portfolio:
AGI shares were unchanged in premarket trading Wednesday. Year-to-date, AGI has declined -6.38%, versus a 3.93% rise in the benchmark S&P 500 index during the same period.
About the Author: Mangeet Kaur Bouns
Mangeet’s keen interest in the stock market led her to become an investment researcher and financial journalist. Using her fundamental approach to analyzing stocks, Mangeet’s looks to help retail investors understand the underlying factors before making investment decisions.
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