Alamos Gold is the IBD Stock Of The Day for Tuesday. Gold stocks are pulling back alongside gold prices after surging on bank crisis concerns, presenting a potential entry for Alamos. Alamos Gold stock joined IBD's SwingTrader roster on Tuesday.
Canadian-based Alamos Gold operates three mines across North America with more than 1,900 employees. Alamos produced 457,200 ounces of gold last year and is ramping up operations.
The company released a shining Q1 earnings beat in late April. Revenue spiked 36% to a quarterly-record $251.5 million to mark thee quarters of accelerating sales. Earnings climbed to 12 cents per share from 5 cents in 2022. Gold production surged 30% year over year to 128,400 ounces in the first-quarter and the company forecasts producing 480,000 to 520,000 ounces this year.
Gold Price
Gold-mining stocks tend to rise or fall with the price of gold, but their moves are more dramatic. Extended moves above or below a miner's cost of production can either charge or extinguish profitability.
Gold stocks and gold-related shares have pulled back as the dollar strengthened and Treasury yields rebounded. Gold prices retreated this month to $1,973 per ounce on Tuesday, down from a near-record high at almost $2,050 per ounce on May 4. Gold hit its record high, above $2,067 an ounce, in August 2020.
Gold is a safe haven, an asset in which investors harbor cash during periods of economy uncertainty. Therefore, gold prices bolted higher in March during the string of bank failures as investors flocked to perceived safe haven assets. Spot gold prices briefly eclipsed $2,000 per ounce in late March after trading around $1,813 on March 8 prior to Silicon Valley Bank's failure.
The U.S. dollar index DXY edged up 0.4% Tuesday, and is up 1.7% over the past month. Still, the index is flat year to date. Meanwhile, 10-year Treasury yields rose the past week to hover near two-month highs as investors backed out of bonds.
The approaching June 1 debt-ceiling deadline is giving investors cause to seek safe havens, including gold or gold mining stocks. The last time the government flirted with default in the summer of 2011, gold prices surged to a then-record $1,920 an ounce.
AGI Stock
Alamos Gold ranks highest among the 23 stocks in IBD's Mining-Gold/Silver/Gems group, according to the IBD Stock Checkup.
Investment funds have been loading up on AGI stock over the past four quarters. Fund ownership increased to 437 funds as of Q1, up from 366 in Q2 last year.
AGI stock leapt nearly 22% to 14.12 on May 4 — its highest level in nearly a decade — after breaking out of a cup base on March 23.
Shares pulled back to test their 50-day moving average, then rebounded 1.8% Tuesday. That lifted shares above Monday's high of 12.78, providing another an entry opportunity, in addition to the rebound.
Shares are just below their 10-day line and 21-day exponential moving average.
Alamos Gold Stock has a perfect 99 Composite Rating, which combines a number of technical indicators into one easy-to-read score. Its shares also have a robust 94 EPS Rating. Alamos Gold stock's relative strength line retreated from its early-month highs but it still has a muscular 96 RS Rating.
AGI stock rallied 26% over the past three months and vaulted nearly 27% so far this year.
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