Gold prices are expected to increase in the coming months as investors buy the safe-haven asset to hedge their portfolios against rising inflation. The Federal Reserve expects inflation to rise further in the coming months because the economy is recovering at a fast pace.
The Fed expects inflation to hit 3.4% in 2021. Furthermore, St. Louis Fed President James Bullard expects the inflation rates to rise in 2022 also, owing to pent-up demand and surging consumer spending.
To benefit from this growing demand, companies engaged in gold mining and exploration are trying to expand their mine operations and increase production by investing heavily in technology. Thus, we believe Gold Fields Limited (GFI), Yamana Gold Inc. (AUY), Alamos Gold Inc. (AGI), and Centerra Gold Inc. (CGAU) will deliver solid returns in the coming months.
Gold Fields Limited (GFI)
Based in South Africa, GFI explores for, extracts, processes, and smelts gold and copper at properties in South Africa, Ghana, Australia, and Peru. It holds interests in nine operating mines with an annual gold-equivalent production of 2.24 million ounces, along with gold mineral reserves of approximately 52.1 million ounces and mineral resources of 116.0 million ounces.
After receiving a license granted by the National Energy Regulator of South Africa in February, GFI announced plans to start the construction of a 40MW solar plant at the South Deep mine in South Africa on May 5, 2021. The plant will generate more than 20% of the mine’s average electricity consumption and will reduce the mine’s carbon footprint by around 100,000 tonnes of CO2 per year. Also, its use of self-generated, renewable energy will translate into savings of around R120m per year on its electricity costs.
The company has earned $1.78 million in revenues from the production of 541,000 ounces of gold in the first quarter of 2021. This represents a 13.9% improvement from the prior-year period.
During its full year, ended December 31, 2020, GFI’s revenue increased 31.2% year-over-year to $3.89 billion. The company’s pre-tax profit came in at $1.18 billion, up 236.3% from the prior-year period. GFI’s total comprehensive income increased 251% year-over-year to $803.80 million. Its EPS increased 326.3% year-over-year to $0.81. GFI had $886.80 billion in cash and cash equivalents as of December 31, 2020.
A $1.04 consensus EPS estimate for the current year represents a 27% improvement from the prior-year period. Analysts’$4.10 billion revenue estimate for the current year represents a 4.7% rise from the prior-year period.
GFI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary ratings system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
The stock has a B grade for Growth, Value, and Quality. To see additional POWR Ratings for GFI’s Stability, Sentiment, and Momentum, click here. GFI is ranked #3 of 42 stocks in the Miners – Gold industry.
Yamana Gold Inc. (AUY)
AUY is a Canada-based precious metal producer. The company has gold and silver production, development stage properties, exploration properties, and land positions in Brazil, Chile, Argentina, Mexico, and Canada.
On June 22, AUY completed the acquisition of the Francoeur, Arntfield and Lac Fortune gold properties adjoining AUY’s Wasamac project from Globex Mining Enterprises Inc., as well as additional claims in the Beauchastel township. The acquisition of the Globex claims will add significantly to the exploration potential of the Wasamac project and is consistent with AUY’s strategy to expand its presence in the Abitibi-Témiscamingue Region of Quebec.
AUY’s revenue came in at $422 million for its fiscal first quarter, ended March 31, 2021, which represents a 18.4% year-over-year rise. The company’s operating profit is reported at $113.60 million, up 29.5% from the prior-year period. While its net earnings increased 730% year-over-year to $52.30 million, its EPS increased 20% year-over-year to $0.06. As of March 31, 2021, the company had $678.10 million in cash and cash equivalents.
Analysts expect AUY’s EPS to improve 47.1% year-over-year to $0.10 for the current quarter, ending September 30, 2021. Its revenue is expected to improve 13.3% year-over-year for the current quarter to $497.67 million. Analysts expect the stock’s EPS to grow at 40% rate per annum over the next five years.
AUY’s POWR Ratings reflect this promising outlook. The stock has a B grade for Growth, Quality, and Value. In addition to the POWR Ratings grades we’ve just highlighted, one can see AUY’s ratings for Stability, Momentum, and Sentiment here. AUY is ranked #4 in the Miners – Gold industry.
Alamos Gold Inc. (AGI)
Based in Canada, AGI acquires, explores for , develops, and extracts gold and other precious metals in North America, Canada, and Mexico. The company’s flagship project is the Young-Davidson mine, which includes contiguous mineral leases and claims totaling 5,587 hectares located in Northern Ontario, Canada.
Last month, AGI reported new results from surface and underground exploration drilling at the Island Gold mine, further extending high-grade gold mineralization in Island East and West. Over the past year, exploration success has enabled a 1-million-ounce rise in mineral reserves and resources at Island Gold and returned the two best intersections to date. These new results are expected to drive further mineral resource growth in one of the highest-grade portions of the ore body.
On April 09, AGI purchased 15.9 million common shares of Manitou Gold Inc., an exploration company, at a price of CAD0.08 ($0.06) per Share. As a result, AGI now has the beneficial ownership of 19.96% of Manitou’s issued and outstanding shares.
AGI’s operating revenues for its fiscal first quarter, ended March 31, 2021, increased 28.5% year-over-year to $227.40 million. The company’s earnings from operations came in at $76.30 million, up 65.2% from the prior-year period. While its adjusted net income increased 67% year-over-year to $49.10 million, its adjusted EPS increased 62.5% from the prior-year period to $0.13. As of March 31, 2021, the company had $238.20 million in cash and cash equivalents.
Analysts expect the company’s revenue to increase 3.7% for the current quarter, ending September 30, 2021, to $226.45 million.
AGI’s strong fundamentals are reflected in its POWR Ratings. The stock has a B grade for Growth and Quality. In addition to the POWR Ratings grades we’ve just highlighted, one can see AGI’s ratings for Value, Sentiment, Stability, and Momentum here. AGI is ranked #5 in the Miners – Gold industry.
Centerra Gold Inc. (CGAU)
Headquartered in Toronto, Canada, CGAU operates as a gold mining company that acquires , explores for , develops, and operates gold and copper properties internationally. The company operates the Kumtor Mine in the Kyrgyz Republic, the Mount Milligan Mine in Canada, the Oksut Mine in Turkey and The Thompson Creek Metals.
For its fiscal first quarter, ended March 31, 2021, CGAU’s revenues came in at $401.85 million, which represents a 6.1% improvement year-over-year. The company’s earnings from operations have been reported at $119.02 million, up 249.6% from the prior-year period. CGAU’s adjusted net earnings increased 81.5% year-over-year to $84.20 million. Its adjusted EPS increased 75% year-over-year to $0.28. The company had cash and cash equivalents of $823.23 million as of March 31, 2021.
It’s no surprise that CGAU has an overall A rating, which translates to Strong Buy in our POWR Ratings system. The stock has an A grade for Value and Quality, and a B grade for Growth. We have also graded CGAU for Momentum, Stability, and Sentiment. Click here to access all CGAU’s ratings. CGAU is ranked #1 in the Miners – Gold industry.
Want More Great Investing Ideas?
GFI shares fell $0.03 (-0.33%) in after-hours trading Friday. Year-to-date, GFI has gained 0.88%, versus a 16.77% rise in the benchmark S&P 500 index during the same period.
About the Author: Sweta Vijayan
Sweta is an investment analyst and journalist with a special interest in finding market inefficiencies. She’s passionate about educating investors, so that they may find success in the stock market. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|GFI||Get Rating||Get Rating||Get Rating|
|AUY||Get Rating||Get Rating||Get Rating|
|AGI||Get Rating||Get Rating||Get Rating|
|CGAU||Get Rating||Get Rating||Get Rating|