Is your stock portfolio as good as gold? While we all know that stocks are where the action is – the S&P 500 is up 29% year-to-date, the Dow Jones has gained 22% – gold has also shown strong appreciation. The precious metal is a traditional hedge against uncertainty and is up 17% for 2019.
Gold’s gains have come in the latter half of the year, as the markets started showing some warning signs of a slow-down, especially in Europe. The US-China trade tensions have made investors nervous, too. And in situations when investors get nervous, they turn to gold as a reliable store of value. The metal is currently trading near $1,500 per ounce.
Of course, gold in the ground isn’t worth much, and buying metal isn’t the only way to invest in it. Mining companies have to get the gold out of the ground and processed for market. And the mining companies can find it advantageous to offer stock on the public market – giving investors the chance to buy into gold stock, rather than gold metal.
TipRanks, a company that tracks and measures the performance of Wall Street analysts, also collects and collates data on the market’s publicly traded companies. Using the Stock Comparison tool, you can compare gold mining stocks side-by-side, to get a better sense of which stocks can outperform in the long run.
Barrick Gold Corporation (GOLD)
The first gold stock on our list today is Barrick. This company, based in Toronto, Canada, is the world’s second largest gold mining company, with operations in 15 countries. Barrick’s total production in 2018 was 4.527 million ounces of gold, and it finished that year with 62.3 million ounces of proven gold reserves.
Barrick’s strong position in its industry is clear from the Q3 earnings results. The report, the most recent for GOLD, showed 15 cents EPS against an 11-cent forecast. Revenues were also strong, gaining 46% year-over-year to reach $2.68 billion. GOLD shares are up 35% in 2019, outpacing the S&P 500 (which has gained 29%) and several of its peers.
Josh Wolfson, a 4-star analyst from RBC Capital, sees Barrick making gains in the near-term. He writes, “We believe GOLD's relative premium valuation appropriately reflects the company's positive upcoming catalysts and encouraging expected year-end resource update. Nevada JV resource definition and ongoing exploration success at Fourmile have the potential to be key value drivers for the company in upcoming years.” Wolfson sees GOLD as a clear Buy proposition, and his $20 price target implies an upside of 9.23%. (To watch Wolfson’s track record, click here)
Barrick’s overall Strong Buy consensus rating is based on 9 analyst reviews given in recent months. These reviews include 8 Buys and only 1 Hold, making it clear that Wall Street is sanguine about the company’s prospects. The average price target, $22.51, implies an upside of 23% from the $18.31 current share price. (See Barrick Gold stock analysis on TipRanks)
B2Gold Corporation (BTG)
Moving on, the second stock on today’s list is B2Gold, a small-cap miner with five active gold mines in Central America, Africa, and the Philippines. The company also has active exploration and development activities on other properties around the world. It has been successful at attracting investors and has expanded its market cap to $3.95 billion. The stock has gained 32% in 2019, making this a successful year for the company’s investors.
Like GOLD above, B2Gold saw a strong third quarter this year, with both revenues and EPS up year-over-year. The top-line number was $311 million, for a gain of 11% from one year ago, while EPS hit 9 cents, a year-over-year gain of 125%. The strong upside in earnings reflects the higher gold prices in 2H19.
Josh Wolfson, quoted above, covers BTG stock as well as GOLD, and he is bullish here, too. He writes, “…2020-22 FCF for BTG is forecast to be amongst the highest under coverage… the company has generated historical upside via development success and maintains incremental opportunities at its Fekola and Otjikoto mines…” He gives some detail on his free cash flow forecast for the company, saying, “Over a 3-year period at spot gold, we calculate BTG could generate an impressive US$1.2b in free cash flow, representing a total 33% of the company's current EV…”
A cash flow of that magnitude will surely bring investors, and Wolfson gives BTG stock a Buy rating and a $4.50 price target that suggests a 17% upside potential.
BTG shares are priced at a bargain, especially for a company giving an entry to the gold industry. The stock sells for just $3.85 per share, but the average price target of $4.95 gives it a robust upside potential of 29%. The Strong Buy consensus rating is based on 5 Buys and just a single Hold set in the past three months. (See B2Gold price targets and analyst ratings on TipRanks)
Osisko Mining, Inc. (OBNNF)
Osisko is a Canadian company, based in Montreal and focusing its operations in Quebec. The company owns over 40% of the land in the Urban Barry greenstone belt, making it the largest stakeholder in this gold-producing region. Osisko’s Quevillon holdings cover over 2,200 square kilometers, and the company is also a major stakeholder in the Windfall properties of the Abitibi greenstone belt. All in all, Osisko is major Canadian gold miner.
The company recorded a net loss in its most recently reported quarter (Q3 2019), on high expenses. On a better note, revenues and cash flow both increased. The figures showed an 8% gain year-over-year in royalty revenue, which reached $33.9 million. Operating activities generated record cash flows for the company, increasing 37% since Q3 2018 and hitting $28.3 million. Osisko’s positive cash flow and plentiful development prospects have helped push the stock up 26% year-to-date.
Wall Street expects that this mining company will show gains in the near term. 4-star analyst, Mark Mihaljevic, of RBC Capital, says, “…expect a modest positive reaction from Osisko Mining shares following the exploration update at Windfall, where 22 drill rigs are active on the Lynx and Triple Lynx deposit…” Mihaljevic gives OBNNF shares a Buy rating with a $3.80 price target, suggesting an excellent upside of 34%. (To watch Mihaljevic’s track record, click here)
The overall outlook on OBNNF is bullish. The stock carries a Strong Buy consensus rating based on 4 recent reviews, which include 3 Buys against 1 Hold. The bargain price belies a strong potential – shares sell for just $2.83, but the $3.35 average price target implies room for 18% growth on the upside. (See Osisko stock-price forecast and analyst ratings on TipRanks)
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