With thousands of publicly traded ideas available to retail investors, picking the most compelling idea can be a grueling challenge. That’s where Barchart’s proprietary Hot Prospects screener – one of the company’s favorite tools – can help save market participants valuable time.
Unlike the cryptocurrency sector, the equities market abides by a defined schedule. So, it’s imperative to make the best use of the hours available. Hot Prospects accomplishes this directive by exclusively filtering for securities that feature a “Buy” rating on Barchart’s TrendSpotter analytics algorithm. As well, the stock must have strong technical indicators, thus pointing to a robust upward trend.
As of Thursday’s close, making the top of the list is gold-mining specialist Agnico-Eagle Mines (AEM). Here’s why the idea is so compelling for speculators:
Top-Tier Technical Strength for AEM Stock
Based on multiple indicators of the technical analysis discipline (or the study of market psychology), AEM stock features a 100% buy rating. However, it’s not just this bullish label that distinguishes Agnico-Eagle from other prospects.
For starters, there has been a progression in optimistic sentiment. Last month, AEM stock achieved an 88% buy rating. Last week, this stat jumped to 100% buy and it maintained this status into Thursday’s close.
Second and more importantly, the current strength and current direction indicators for AEM stock have pinged as the top 1% of its class. From a short-term framework to a long-term outlook, every major indicator points to a buying opportunity.
One of the market’s golden rules is to not fight the tape. Until proven otherwise, you want to stay away from the Agnico-Eagle steam train.
Financials Support Rising Sentiment for Agnico-Eagle
At the moment, AEM stock trades at 27.69X trailing-year earnings and 4.65X last year’s revenue. Notably, on the earnings front, investors enjoy a discount, which adds to the case that AEM stock represents a hot prospect. On average, the gold-mining sector features a trailing-year earnings multiple of 36.79X.
Even better, Wall Street analysts anticipate that Agnico’s earnings per share for the current fiscal year will land at $2.56. Last year, the company posted earnings of $2.23 per share. Therefore, on a forward earnings basis, the already-discounted valuation of AEM stock is even better – 24.52X per Barchart.
As for the top line, the aforementioned 4.65X multiple is admittedly on the high side. Currently, the average sales multiple for the gold-mining space is 2.78X. Still, analysts anticipate revenue of $7.23 billion for fiscal 2024. That’s up 9% from last year’s print of $6.63 billion.
Moreover, the most optimistic sales target calls for revenue of $7.98 billion. At that metric and assuming a shares outstanding count of 498.6 million, AEM stock is trading at 3.97X projected 2024 top-end revenue. While not discounted relative to the industry average, it’s a much better deal than what is presented on last year’s basis.
The Experts Weigh In
Another element that favors AEM stock to continue its run higher is analysts’ consensus rating. Currently, it stands at Strong Buy. This assessment breaks down as nine Strong Buys, three Moderate Buys and one Hold. Importantly, there are no Sells of any kind (neither moderate nor strong).
Generally, there has been modest progress in optimism for AEM stock. Three months ago, the rating broke down as eight Strong Buys and three Moderate Buys. Two months ago, there was an additional Strong Buy rating though to be fair, one month ago, a Hold rating materialized.
Most importantly, the mean price target stands at $69.27. Granted, that’s not much upside from Thursday’s close of $63.47. However, the high-side target calls for $85.68. That appears realistic because of the fundamentals, to be discussed below.
Compelling Narrative Bolsters the Gold Market
Heading into 2024, monetary policy discussions focused on the prospects of lowering benchmark interest rates. Barchart contributor Rich Asplund stated the following in early January:
Market expectations have increased for global central banks to ease their aggressive monetary tightening campaigns and begin cutting interest rates this year. With inflation pressures expected to continue receding, the Federal Reserve, European Central Bank (ECB), and Bank of England (BOE) are expected to lead the push to lower interest rates this year.
However, in the U.S., a blistering jobs market significantly clouds the previously accepted narrative. Yes, it’s great that the employment rate continues to rise. But this dynamic also means more dollars are chasing after fewer goods. That’s inflationary no matter how you slice it.
This framework should benefit gold miners, especially favored ones like AEM stock.
Hot Prospects: More Than Just a Name
When it comes to Barchart’s Hot Prospects, it’s not just a catchy marketing slogan. Instead, the unique underlying algorithm captures ideas that encompass a holistic range of metrics, from prime technical indicators to attractive fundamental catalysts. With AEM stock, most of the key datapoints suggest sustained upside, making Agnico-Eagle a truly intriguing bullish candidate.
On the date of publication, Josh Enomoto did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
