Barrick Gold Corporation (USA) (ABX) — I last reviewed ABX stock as the Trade of the Day on Nov. 25, recommending readers buy shares at $7.50 with a trading target of $9.10 to $9.50 within three months. ABX stock hit my target just two months later, delivering a return of more than 25%, and went on to make new high after new high, closing at $16.35 on Tuesday.
When I recommended ABX stock in November, gold was trading at $1,074 an ounce. The price of the yellow metal has since risen 17% to $1,259 an ounce, but despite this and the fact that ABX stock has more than doubled since then, I still see opportunity for investors who want to go long.
S&P Capital IQ Equity Research rates ABX stock a “Buy,” highlighting management’s focus on cash flow, profitable production and reducing costs. While its analysts only have a 12-month price target of $14 on shares, they note that the company is positioned to be cash flow positive with gold prices as low as $1,000 an ounce. With gold currently trading above $1,200 an ounce, it seems reasonable that Capital IQ may raise its price target for the world’s largest gold miner.
Turning to the chart, after making a high near $53 in late 2011, ABX stock plummeted almost 90% to a low of $5.91 in September 2015. Shares gained following my November recommendation but really picked up steam early this year.
In the process of making new highs, ABX stock formed a horn pattern, which is almost always indicative of profit-taking. However, this is still my favorite gold stock, and a retracement below $14 would offer traders an excellent opportunity to purchase shares with a price objective of $20-plus. If successful, this trade would result in a profit of more than 40%.
