Few investors are as patient as precious-metals holders. From gold bugs to silver stackers, these folks are known for riding out tough months, years, even decades.
That kind of resolve is commendable, and the same philosophy and approach can be applied to gold stocks.
Some experts feel that precious metals are entering into a new renaissance. Gold in particular has been showing bullish price action lately.
Back in September 2018 gold holders waited patiently as the per-ounce price touched $1,180. By mid-April, the gold price reached $1,750.
Gold stocks tend to follow the price of the metal itself. However, not all gold stocks are created equal. It’s critical for investors to consider each company’s fundamentals before buying into the stock.
The following three gold stocks have solid fundamentals and could make big moves if the gold price continues to push to new multi-year highs:
Each of these companies has its own advantages, so let’s take a closer look at the specific merits of these outstanding gold miners.
Kinross Gold (KGC)
Looking for a value proposition in the mining space? Kinross Gold stock might be just what you’re seeking.
KGC is a cash-flow king among resource companies. Long-term investors can’t just rely on the price of gold increasing, so that liquidity bodes well. Kinross is a well-known name in the resource space but more importantly, it ranks favorably when considering value-focused criteria.
For one thing, KGC stock has a low trailing 12-month price-to-earnings ratio of just 10.77. Another way to measure value is via all-in sustaining costs per ounce of gold, or AISC. For Kinross, the estimated AISC for 2020 will be just $970, far below current price levels for gold.
Just as importantly, the company is on track to produce literally tons of gold. To be precise, Kinross’ estimated gold production forecast for 2020 is 2.4 million ounces of gold.
And as mentioned at the start, the company maintains a strong cash-positive position. In fact, by the fourth quarter of last year, Kinross had increased its liquidity position to more than $2 billion. The company’s credo is “Delivering Value” and Kinross clearly has the numbers to back it up.
There are plenty of Canadian resource companies, but Iamgold stands out among its peers due to its favorable financials.
Iamgold claims to be building a cash-flow pipeline, and there’s compelling data to support that assertion. Year-to-date, the company’s AISC estimate has held in the very reasonable range of $1,100 to $1,150. Therefore, even if the price of gold stays flat, or even slightly declines, Iamgold should remain a profitable venture.
Revenues of $1,065.3 million last year indicate that Iamgold’s cash-flow pipeline is indeed running smoothly. And this is a company with no shortage of minerals. At the end of last year, Iamgold had 11,965,000 total ounces of inferred resources, representing a year-over-year increase of 38%.
Higher gold prices could increase the value of those minerals, potentially leading to a significantly higher share price for IAG stock.
Gold Fields (GFI)
Anyone seeking to capitalize on higher gold prices should take a serious look at Gold Fields stock. Having a low per-ounce AISC is important for companies in this sphere, and its here that GFI really shines.
According to the company’s guidance for 2020, Gold Fields’ AISC will be between $920 and $940 per gold ounce.
Gold Fields is a regionally diversified miner with assets in South America, South and West Africa and Australia. This diversification likely contributed to the company’s impressive cash flow.
Specifically, Gold Fields generated a net cash flow of $249 million last year. Some gold companies struggle to be profitable at all, so Gold Fields’ positive cash flow puts the company head and shoulders above some of its industry peers.
Just as importantly, Gold Fields is potentially sitting on many ounces of gold. The company’s estimate for December of 2019 indicated 146.8 million ounces of managed gold-equivalent resources. If the price of gold happens to increase, all of that gold could provide supreme value for GFI stockholders this year.
As of this writing, David Moadel did not hold a position in any of the aforementioned securities.