Trade of the Day: Breakout Could Send ABX Stock Soaring

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Barrick Gold Corporation (USA) (ABX) — This is the world’s largest gold miner based on production and reserves. It has mines in the United States and around the world, including new lower-cost gold mines that are expected to contribute to future growth.

Despite weakness in gold prices, S&P Capital IQ Equity Research rates ABX stock a “buy,” noting the miner’s effective cost reduction program and an improving balance sheet. Management has already exceeded its $3 billion debt reduction target for 2015, saving $3.2 billion by November. Capital IQ estimates Barrick will end the year with 26% lower debt than 2014. The company also announced plans to sell a number of non-core assets in Nevada for $720 million in cash.

Earnings are expected to fall to 30 cents in 2015, down from 56 cents last year, and then increase to 47 cents in 2016. Capital IQ has a 12-month target of $11 on ABX stock, which is 5.9 times its 2016 EBITDA estimate.

Since hitting a high over $52 in 2011, ABX stock has been in a sharp downtrend. But in August 2015, buyers came in and shares began a bottoming pattern. In early October, ABX stock broke its bearish resistance line and jumped through its 50-day moving average.

Since then, it has formed a rectangle, which is a bullish consolidation pattern. Support is at the 50-day moving average at $7.22 and resistance is at $8. A break through $8 could lead to a jump to the 200-day moving average, now at $9.68.

Buy ABX stock at $7.50 with a trading target of $9.10 to $9.50 for a potential gain of 21% to 27% within three months.

ABX Stock Chart
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Article printed from InvestorPlace Media, https://investorplace.com/2015/11/barrick-gold-corporation-usa-abx-trade-of-the-day/.

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