Eldorado Gold Corp USA (EGO) — This Canada-based mining company is considered a top pick by Credit Suisse Group AG ADR (CS) as a low-cost producer of gold with a strong balance sheet that has helped it weather lower gold prices. The firm has an “outperform” rating on EGO stock and a 12-month price target of $10, which is nearly 50% above current prices.
In the third quarter, adjusted earnings per share (EPS) of $0.05 missed the consensus estimate by a penny. But the company met production estimates and lowered operating costs.
Operating costs of $488 an ounce were better than the $540 an ounce expected by Credit Suisse. And the miner appeared to be on track to meet full-year production estimates of 790,000 ounces.
As the largest foreign producer of gold in China, it is important that Eldorado Gold has selected a sponsor for a Hong Kong listing of its Chinese business, which is worth $1.1 billion.
The solid technical picture for EGO stock begins in October 2013 (before our chart) with a series of bottoms at about $5.25. These lows connect to the low of November 2014 and form a solid base from which EGO stock is now building a right triangle.
The apex of that triangle is at about $6.24, which is also the 50-day moving average. With each day, the trading range is narrower, so it should be only a short time before EGO stock breaks out. On Friday, it closed on its 200-day moving average at $6.74, and its resistance line is just above at $7.
Buy EGO stock on a break through $7 resistance with a trading target of $8.50 for a gain of more than 20%. Longer-term investors may want to purchase shares as a cornerstone investment in the precious metals group.
