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3 Large Gold Miners Near 52-Week Lows

- By Alberto Abaterusso

Three gold mining stocks are trading cheaply since their share prices are close to a 52-week low. These companies are Goldcorp Inc. (GG), Newmont Mining Corp. (NEM) and AngloGold Ashanti Ltd. (AU).

Goldcorp is trading around $10.74 per share on the New York Stock Exchange. The current share price is only 36 cents above the 52-week low of $10.38 and nearly 45% below the 52-week high of $15.55.


Following last month's 30% drop in market value, the share price is now below the 200-, 100- and 50-day simple moving average lines. Shares of Goldcorp have fallen 17% for the 52 weeks through Aug. 17. The company has a market capitalization of $9.03 billion.

There are other indicators that can be considered to determine whether a gold stock is likely trading at a compelling price or not. One of these indicators is the enterprise value to earnings before interest, taxes, depreciation and amortization ratio, which is 10.74. According to GuruFocus, it is about 15.5% off the industry median of 9.3.

The downtrend in the price of gold may push Goldcorp a little bit lower. The stock, however, is approaching oversold levels. The 14-day relative strength index is 25.48. Therefore, I don't expect any other significant weakness.

Another indicator is the price-book ratio. Goldcorp has a price-book ratio of 0.66, versus an industry median of 1.74.

GuruFocus has assigned a financial strength rating of 5 out of 10 and a profitability and growth rating of 6 out of 10.

Goldcorp produces 2.5 million ounces of gold annually. The Canadian miner is expecting to incur an all-in sustaining cost of $760 to $840 per ounce of metal sold. The company is producing gold from seven mines. Two of these gold deposits, Eleonore in Quebec and Cerro Negro in Argentina, are expected to drive up production in the second half of the year.

Analysts are suggesting to buy Goldcorp. The recommendation rating is 2 out of 5 with an average target price of $13.56 per share. Out of three estimates, the lower end of the range is $12 and the higher end is $15.03 per share.

The second gold stock is Newmont Mining. The gold producer - which is one of the largest in the world - is trading at about $32.06 per share. The 52-week range is $31.45 to $42.04. The current share price stands 39 cents above the lower end of the range and about 30% below the higher end of the interval.

Over the last two months of trading, the stock fell 18.5% and is now below the 200-, 100- and 50- day SMA lines, as illustrated in the GuruFocus chart below. The stock has a market cap of $17.1 billion and has fallen 12% for the 52 weeks through Aug. 17.

The 14-day RSI is 15.36 versus a 20 to 80 range. That means Newmont Mining is oversold.

The price-book ratio is 1.58 versus an industry median of 1.74. The EV-to-EBITDA ratio is 7.36, below the industry median of 9.3.

At current prices, Newmont Mining seems to be a bargain.

The U.S. miner produces about 70% to 75% of its total production from assets that are located in friendly mining jurisdictions. Newmont Mining is targeting a production of 4.9 million to 5.4 million ounces of attributable gold at an average AISC of $995 per ounce of metal sold. Newmont Mining also produces copper. Copper production is expected to be between 40,000 and 60,000 tons of attributable metal. The AISC per pound of copper sold should average $2.10.

The miner has proven and probable mineral reserves for 68.5 million ounces of attributable gold. The copper reserves stood at 1.2 million tons at the end of 2017.

GuruFocus has assigned the company a profitability a growth rating of 5 out of 10. Financially speaking, Newmont Mining can rely on a good balance sheet for the continuation of its business. GuruFocus rated its financial strength 6 out of 10.

Newmont Mining has a recommendation rating of 2.4 out of 5. The average analyst is targeting a share price of $44.16.

The third gold mining stock is AngloGold Ashanti. Shares of the South African gold producer stand at $7.24 with a $3.12 billion market cap. After a 30% drop in market value, which started four months ago, the share price is below the 200-, 100- and 50-day SMA lines. The GuruFocus chart also shows AngloGold Ashanti has fallen 26% for the 52 weeks through Aug. 17. The 52-week range is $7.07 to $12.

The stock has a price-book ratio of 1.27 versus an industry median 1.74 and an EV-to-EBITDA ratio of 5.95 versus an industry median of 9.3.

The EBITDA margin of the South African gold producer was 21.3%, underperfoming a majority of its direct peers.

GuruFocus has assigned a profitability and growth rating of 6 out of 10 and a financial strength rating of 5 out of 10.

AngloGold Ashanti is targeting an increase in annual gold output and a reduction in the AISC per ounce of gold sold through a combination of rigorous capital discipline, innovation and additional investments.

For full fiscal 2018, the South African miner is anticipating total gold production of 3.325 million to 3.45 million ounces at an AISC of $990 to $1,060 per ounce of metal sold.

Disclosure: I have no positions in any securities mentioned in this article.

This article first appeared on GuruFocus.