Multi-Year Lows Tarnish Gold Stocks

Richard Suttmeier

NEW YORK ( TheStreet) -- Today I profile eight gold mining stocks that have become tarnished as their stock prices fall. Three are still above their 2012 lows, but five have been setting new multi-year lows almost daily.

Weakness in gold mining shares is telling us that Comex Gold could be at least headed for a test of its December 2011 post-bubble low at $1523.9. This scenario is enhanced by the fact that all eight gold miners profiled today are well below their 200-week simple moving averages, while gold is not as shown in the weekly chart.


Comex gold has been above its 200-week SMA since February 2002 and this key moving average is currently at $1417.5, which is the downside given a trend below the December 2011 low at $1523.9. Gold has been trading back and forth around my annual pivot at $1599.9 so far this year.


Chart Courtesy of Thomson/Reuters

At www.ValuEngine.com we show that 58.6% of all stocks are overvalued with 15 of 16 sectors overvalued with 8 overvalued by double-digit percentages. Gold mining stocks are in the one sector that's undervalued, which is basic materials, undervalued by 7.0%. The gold mining industry is undervalued by 32.7% with today's eight stocks undervalued by 29.4% to 56.7%. Performance wise, 7 of 8 stocks are down 29.5% to 56.8% over the last twelve months.



Reading the Table

OV/UN Valued: Stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.

Value Level: Price at which to enter a GTC limit order to buy on weakness. The letters mean; W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.

Pivot: A level between a value level and risky level that should be a magnet during the time frame noted.

Risky Level: Price at which to enter a GTC limit order to sell on strength.


Buy-and-Trade Strategies for Today's Woodshed Stocks:

Barrick Gold ($28.65) declined to yet another new multi-year low at $28.51 on Monday and is well below its 200-week SMA at $42.43 with an extremely oversold weekly chart profile. The stock has been downgraded to hold from buy and is 35.7% undervalued with a trailing 12 months price-to-earnings ratio of just 4.9. The March 2009 low is $25.54 with a weekly pivot at $29.16 and quarterly risky level at $31.69.

Agnico Eagle Mines ($39.19) did not reach a new multi-year low on Monday, but the stock is well below its 200-week SMA at $56.08 with an extremely oversold weekly chart profile. The stock has been upgraded to strong buy from buy and is 36.7% undervalued with a trailing 12 months P/E a bit elevated at 21.5. My weekly value level is $37.95 with a monthly risky level at $56.14.

AngloGold ($23.41) declined to yet another new multi-year low at $23.33 on Monday and is well below its 200-week SMA at $40.28 with an extremely oversold weekly chart profile. The stock has a buy rating is 44.6% undervalued with a trailing 12 months P/E of just 6.8. The January 2009 low is $22.50 with a weekly pivot at $23.68 and monthly risky level at $26.50.

Gold Fields ($8.05) declined to yet another new multi-year low at $8.01 and is well below its 200-week SMA at $12.18 with a negative weekly chart profile. The stock has a buy rating is 50.1% undervalued with a trailing 12 months P/E of just 6.8. The January 2009 low was $6.39 with a weekly pivot at $9.22 and quarterly risky level at $10.13.

Goldcorp ($32.03) did not trade to a new multi-year low on Monday, but is well below its 200-week SMA at $42.58 with an extremely oversold weekly chart profile. The stock has a hold rating is 29.4% undervalued with a slightly elevated trailing 12 months P/E of 18.1. The July 2012 low is $31.54 with a weekly pivot at $33.75 and semiannual risky level at $34.33.


IAMGold ($6.15) declined to yet another new multi-year low at $6.10 on Monday, well below its 200-week SMA at $15.71 with an extremely oversold weekly chart profile. The stock has a buy rating is 56.7% undervalued with a trailing 12 months P/E of just 7.6. My weekly value level is $5.78 with a monthly risky level at $10.57.

Kinross Gold ($7.53) did not trade to a new multi-year low but is well below its 200-week SMA at $14.89 with an extremely oversold weekly chart profile. The stock has been upgraded to strong buy from buy rating is 54.3% undervalued with a trailing 12 months P/E of just 9.9. My semiannual value level is $6.63 with a weekly pivot at $7.26 and monthly risky level at $9.78.

Newmont Mining ($39.00) declined to yet another new multi-year low at $38.60 well below its 200-week SMA at $53.09 with an extremely oversold weekly chart profile. The stock hold rating is 29.5% undervalued with a trailing 12 months P/E of 10.8. The March 2009 low is $34.40 with a weekly pivot at $39.83 and quarterly risky level at $45.28.

At the time of publication the author held no positions in any of the stocks mentioned.

This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.

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