Gold has experienced a considerable surge in its value recently. The yellow metal surged more than 13% in the first quarter of 2024, solidifying its position as one of the best-performing asset classes. Central bank purchases, increased retail demand, growing anticipation of interest rate cuts, and geopolitical tensions contributed to the rise in gold prices.
Given the industry’s shiny prospects, investors could consider buying fundamentally sound gold stocks Barrick Gold Corporation (GOLD), Kinross Gold Corporation (KGC), and Centerra Gold Inc. (CGAU) for exciting returns in May.
Gold prices appear on track for a second consecutive weekly gain as the recent inflation data fueled anticipation of interest rate cuts by the Federal Reserve twice this year. Spot gold was up 0.3% at $2,384.08 per ounce by 09:45 GMT on May 17. Bullion prices have gained nearly 1% so far this week.
“Signs that inflation may be slowing down raise the prospect of interest rate cuts in the coming months, which tend to support gold and silver prices,” stated Frank Watson, market analyst at Kinesis Money.
According to the World Gold Council’s report for the first quarter, total global gold demand (inclusive of OTC purchases) increased 3% year-on-year to 1,238 tonnes, representing the strongest first quarter since 2016.
Healthy investment from the OTC market, central bank purchasing, and higher Asian market demand contributed to the gold price touching a record quarterly average of $2,070/oz — 10% higher year-on-year and 5% up quarter-on-quarter.
Moreover, the gold market is expected to reach 6.32 kilotons by 2029, expanding at a CAGR of 7.4% during the forecast period (2024-2029), driven by the ever-growing demand for gold in the form of jewelry, technology, and long-term savings. Also, the diversified application of gold for electronics, coins, medals, art, dentistry, medicine, and monetary systems fuels its prospects.
Besides, the jewelry industry accounted for a 48.7% share of the global gold demand in 2023, which came at 2,168 metric tons and has emerged as the largest gold-demanding industry worldwide in recent years. The surged demand has accelerated the world production of gold mines, resulting in about 3,000 metric tons of gold production in 2023.
In light of these encouraging trends, let’s look at the fundamentals of the three best Miners - Gold stocks, beginning with number 3.
Stock #3: Barrick Gold Corporation (GOLD)
Based in Toronto, Canada, GOLD engages in the exploration, mine development, production, and sale of gold and copper properties internationally. The company has ownership interests in producing gold mines in Argentina, Canada, Côte d’Ivoire, the Democratic Republic of Congo, the Dominican Republic, Mali, Tanzania, and the U.S.
On May 1, GOLD’s subsidiary Barrick Gold (International Holdings) Ltd. entered into an exploration earn-in agreement with Geophysx Jamaica Ltd. concerning certain properties located in Jamaica. The agreement initially gives GOLD access to around 4,000 square kilometers of consolidated land positions throughout the country.
The strategic agreement will align well with GOLD’s operations, enhancing its capabilities and delivering new world-class discoveries.
On April 25, GOLD’s Nevada Gold Mines celebrated the official opening of its new underground mine, Goldrush. The Goldrush Project is on track to produce 130,000 ounces of gold this year and will further enhance the value of Nevada Gold Mines (NGM). Barrick owns 61.5% of the project through the NGM joint venture with Newmont (38.5%).
On March 1, GOLD’s Africa-based largest gold mine, Kibali, and the Autorite de Regulation de la Sous-Traitance dans le Secteur Prive, the body monitoring the DRC’s sub-contracting sector, collaborated on a range of local content initiatives. This strategic partnership has been designed to enhance the mine’s extensive use of Congolese contractors and suppliers.
During the first quarter that ended March 31, 2024, GOLD’s revenues increased 3.9% year-over-year to $2.75 billion. The company’s adjusted net earnings grew 34.8% and 35.7% from the year-ago value to $333 million and $0.19 per share, respectively. Its attributable EBITDA rose 6.6% from the prior year’s quarter to $907 million.
In addition, the company’s free cash flow was $32 million for the quarter. The company’s cash and equivalents and total assets came in at $3.94 billion and $45.84 billion as of March 31, 2024, respectively.
Analysts expect GOLD’s revenue for the second quarter (ending June 2024) to grow 13.6% year-over-year to $3.22 billion, and its EPS is expected to increase 33.9% year-over-year to $0.25 for the current quarter. Moreover, the company surpassed the consensus EPS estimates in each of the trailing four quarters.
Over the past month, the stock has surged 7.3% and 10.3% over the past six months to close the last trading session at $17.52.
GOLD’s bright prospects are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, each weighted to an optimal degree.
GOLD has a B grade for Sentiment and Quality. It is ranked #7 out of 43 stocks in the Miners - Gold industry.
To check other POWR Ratings of GOLD for Growth, Value, Momentum, and Stability, click here.
Stock #2: Kinross Gold Corporation (KGC)
Based in Toronto, Canada, KGC engages in the acquisition, exploration, and development of gold properties. It operates various mines, including the Fort Knox mine and the Manh Choh project in Alaska; the Round Mountain and the Bald Mountain mines in Nevada, the U.S.; the Paracatu mine in Brazil; and the La Coipa and the Lobo-Marte project in Chile.
On May 8, KGC’s Board of Directors declared a dividend of $0.03 per common share for the first quarter of 2024. The dividend is payable on June 13, 2024, to shareholders of record as of the close of business on May 30, 2024.
KGC pays an annual dividend of $0.12, which translates to a yield of 1.53% at the current share price. Its four-year average dividend yield is 1.98%. Moreover, the company’s dividend payouts have increased at a CAGR of 10.1% over the past three years.
In terms of forward non-GAAP P/E, KGC is trading at 16.27x, 3.4% lower than the industry average of 16.85x. Likewise, the stock’s forward EV/EBITDA multiple of 5.66 is 35.4% lower than the industry average of 8.76. Also, its forward Price/Cash Flow of 5.62x is 38.5% lower than the industry average of 9.14x.
For the first quarter that ended March 31, 2024, KGC’s metal sales increased 16.4% year-over-year to $1.08 billion. The company's operating earnings grew 34.2% from the year-ago value to $193.20 million. Adjusted net earnings attributable to common shareholders came in at $124.90 million and $0.10 per share, up 42.6% and 42.8% year-over-year, respectively.
Also, the company’s adjusted free cash flow increased 204% year-over-year to $145.30 million.
Analysts expect KGC’s revenue and EPS for the third quarter (ending September 2024) to increase 14.7% and 14.3% year-over-year to $1.26 billion and $0.14, respectively. Furthermore, it has topped the consensus revenue and EPS estimates in each of the trailing four quarters.
Shares of KGC have gained 44.4% over the past six months and 48.8% over the past year to close the last trading session at $7.84.
KGC’s sound fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system.
KGC has a B grade for Quality, Sentiment, and Value. It is ranked #5 out of 43 stocks in the Miners - Gold industry.
To check other POWR Ratings of KGC for Momentum, Growth, and Stability, click here.
Stock #1: Centerra Gold Inc. (CGAU)
Headquartered in Toronto, Canada, CGAU is a gold mining company that engages in acquiring, exploring, developing, and operating gold and copper properties globally. The company’s flagship projects include the 100% owned Mount Milligan gold-copper mine in British Columbia, Canada, and the Öksüt Gold Mine located in Turkey.
On May 14, CGAU’s Board of Directors approved a quarterly dividend of C$0.07 ($0.05) per common share – around C$15.0 million ($11.1 million). The quarterly dividend is payable on June 12, 2024, to shareholders of record as of the close of business on May 29, 2024.
CGAU’s annual dividend of $0.21 translates to a yield of 2.95% at the current share price. Its four-year average dividend yield is 2.70%. Moreover, the company’s dividend payouts have increased at a CAGR of 5.9% over the past three years.
On February 14, CGAU and its subsidiary, Thompson Creek Metals Company Inc., entered into an additional agreement with RGLD Gold AG, Royal Gold, Inc. (RGLD) subsidiary, regarding the Mount Milligan Mine, resulting in a mine life extension to 2035 and established favorable parameters for potential future mine life extensions.
For the first quarter that ended March 31, 2024, CGAU’s revenue grew 35.1% from the year-ago value to $305.80 million. Its earnings from mine operations of $98.70 million indicate growth of 2567.6% year-over-year. The company’s free cash flow came in at $81.20 million for the quarter.
Furthermore, the company’s adjusted net earnings came in at $31.30 million, or $0.15 per share, compared to an adjusted net loss of $52.90 million or $0.15 per share in the prior year’s quarter, respectively.
Analysts expect CGAU’s revenue and EPS for the fiscal year (ending December 2024) to grow 6.9% and 932.5% year-over-year to $1.17 billion and $0.52, respectively. Moreover, the company surpassed the consensus revenue estimates in three of the trailing four quarters.
Over the past six months, CGAU’s stock has surged 28.5% and 26.2% over the past year to close the last trading session at $6.98.
CGAU’s POWR Ratings reflect this robust outlook. The stock has an overall grade of A, translating to a Strong Buy in our proprietary rating system.
CGAU has an A grade for Value and a B for Quality and Growth. It has topped the list of 43 stocks within the same industry.
To see the other ratings of CGAU for Sentiment, Stability, and Momentum, click here.
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GOLD shares rose $0.04 (+0.23%) in premarket trading Friday. Year-to-date, GOLD has declined -1.45%, versus a 11.67% rise in the benchmark S&P 500 index during the same period.
About the Author: Rjkumari Saxena
Rajkumari started her career as a writer but gradually shifted her focus to financial journalism, leveraging her educational background in Commerce. Fascinated by the interplay of business and economic shifts in equities, she aspires to evolve as an analyst. With a knack for simplifying complex financial concepts, her mission is to empower investors with insights that lead to profitable decisions.
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