Gold prices are sliding lower at the start of the new trading week because the decision by the Turkish President to oust a hawkish central bank governor pushed investors toward the U.S. dollar. However, the yellow metal is expected to rebound on worries around inflationary headwinds. Economists believe that as the U.S. Federal Reserve pumps in more money into the economy, inflation could spike in the near-term.
According to a senior economist at CIBC, Katherine Judge, “Inflation is set to get a lift in the months ahead from gasoline prices, while base effects will amplify price gains along with an expected surge in demand as re-openings continue and fresh fiscal stimulus is received.”
Hence, investors seeking to capitalize on the revival in gold prices can bet on stocks of mid-cap gold miners. A recent report by Van Eck Global suggests that larger gold mining companies have begun to diversify into other precious metals because their gold production peaked out in 2003. However, mid-cap miners are still actively pursuing gold exploration, and they present many opportunities at low-medium risk.
Against this backdrop, we think B2Gold Corp (BTG), Yamana Gold Inc. (AUY), Alamos Gold Inc. (AGI), and Harmony Gold Mining Company Limited (HMY) could demonstrate strong gains as gold rebounds.
B2Gold Corp (BTG)
BTG is involved in exploring and developing gold & mineral properties in Nicaragua, the Philippines, Namibia, Burkina Faso, and Chile.
During the third quarter, ended September 30, 2020, BTG’s gold revenue climbed 57% year-over-year to $487 million from its three operating mines on sales of 253,200 ounces at an average price of $1,924 per ounce. Its cash flow from operating activities for the quarter hit a quarterly record of $301 million. Its EPS for the quarter climbed to $0.25 from $0.05 posted in the same period last year. BTG expects to generate cash flows from operating activities of more than $900 million in 2020.
BTG has surged 55% over the past year to close yesterday’s trading session at $4.68. Over the past six months, the stock declined 31.4%.
It’s no surprise that BTG has an overall B rating, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
BTG has an A grade for Quality and a grade of B for both Value and Momentum. In the B-rated, 45-stock Miners - Gold industry, it is ranked #11.
In addition to the POWR Rating grades I've just highlighted, you can see the BTG’s ratings for Stability, Growth, and Sentiment.
Yamana Gold Inc. (AUY)
AUY is a Canada-based miner engaged in gold mining and related activities in Brazil, Chile, Argentina, Mexico, and Canada.
AUY’s fourth quarter gold production of 255,361 GEO, included 221,659 ounces of gold and 2.59 million ounces of silver, with production during the quarter exceeding its sales by more than 7,000 ounces of gold. Its net debt fell by nearly $53 million from the third quarter, while the total decline during the year was $323 million. AUY has completed the integration of the Agua Rica project with the Minera Alumbrera during the quarter, which together is now known as the MARA project.
Analysts expect AUY’s revenue for the year ending December 31, 2021 to be $2 billion, representing a 25.7% year-over-year rise. Its EPS during the period is expected to grow 12.5% to $0.36.
AUY ended yesterday's trading session at $4.57, rallying 62.6% over the past year. During the past six months, the stock has lost 25.3%.
Due to its bright prospects, AUY has an overall B rating, which translates to a Buy in our POWR Rating system. AUY has a Growth and Value Grade of B. In the same industry, it is ranked #12.
Click here to see the additional POWR Ratings for AUY (Stability, Quality, Momentum, and Sentiment)
Alamos Gold Inc. (AGI)
AGI is a Canadian intermediate gold producer with diversified production from three operating mines in North America.
AGI’s Production for the fourth quarter climbed to 120,400 ounces of gold, representing its highest quarterly total in 2020, led by strong performances at Young-Davidson and Island Gold. Young-Davidson manufactured 48,000 ounces of gold and generated a record mine-site free cash flow of $30.8 million. AGI sold 121,831 ounces of gold at an average realized price of $1,860 per ounce for record revenues of $226.6 million during the quarter.
A consensus revenue estimate for the quarter ending March 31, 2021 is $233.2 million, signaling a 31.8% year-over-year increase. Its EPS for the quarter is expected to grow 75% to $0.14.
AGI ended yesterday’s trading session at $8.26, climbing 55% over the year. During the past six months, the stock declined 12.5%.
AGI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our POWR Ratings system. AGI has a Growth and Momentum Grade of B. In the Miners-Gold industry, it is ranked #9.
To see additional POWR Ratings for Stability, Value, Sentiment, and Quality for AGI, Click here.
Harmony Gold Mining Company Limited (HMY)
HMY is a South African miner that explores and mines gold in South Africa and Papua New Guinea.
HMY’s gold production during the first six months, ended December 31, 2020, climbed 8% year-over-year to 23,183 kgs. The company’s operating cash flow surged 65% to R6.8 billion, while its net debt declined 58% to R 580 million. The company’s CEO, Peter Steenkamp, stated, “Through astute acquisitions, we have successfully added quality ounces and de-risked our asset portfolio. Harmony is no longer a marginal gold producer, but an emerging market mining specialist.”
HMY ended yesterday’s trading session at $4.54, soaring 107.3% over the year. During the past six months, HMY declined 17.9%.
HMY’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our POWR Ratings system. HMY has a Growth and Value grade of A and a Momentum grade of B. In the Miners-Gold industry, it is ranked #13.
To see additional POWR Ratings for HMY, Click here.
The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
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BTG shares were trading at $4.67 per share on Monday afternoon, down $0.01 (-0.21%). Year-to-date, BTG has declined -16.61%, versus a 5.34% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education.
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