September’s inflation came in hotter than expected. The U.S. consumer price index (CPI) gained 8.2% relative to a year earlier. Moreover, economies worldwide are experiencing price rises. According to the International Monetary Fund (IMF), global inflation could rise from 4.7% in 2021 to 8.8% in 2022.
Conventionally, gold is seen as an inflation hedge as the yellow metal tends to hold its value better than other assets in the long run.
Although gold prices have taken a hit due to the strengthening dollar and rising treasury yields and are trading at $1,627.81 per ounce, the global delegates meeting at the London Bullion Market Association’s annual precious metals conference predicted that the metal’s prices would rise to $1,830.50 per ounce in a year’s time.
Hence, fundamentally strong gold stocks Gold Fields Limited (GFI) and Torex Gold Resources Inc. (TORXF) could be considered good additions to your portfolio.
Gold Fields Limited (GFI)
Based in Sandton, South Africa, GFI is a gold producer that operates reserves and resources in Chile, South Africa, West Africa, Australia, and Peru. The company also engages in the exploration of copper deposits.
On October 4, the company updated investors on its proposed acquisition of all the outstanding common shares of Yamana Gold Inc. (AUY). GFI intends to hold a general meeting on November 22 with shareholders. The proposed acquisition should enhance the company’s operative capability significantly.
In September, the company announced that its wholly-owned indirect holding subsidiary, Gold Fields Atacama Holdings, had purchased 15 million common shares in the capital of Torq Resources Inc., representing approximately 15.05% of the issued and outstanding Torq Shares. This should be beneficial for GFI.
For the six months that ended June 2022, GFI’s revenue increased 12.7% year-over-year to $2.24 billion. Normalized profit attributable to owners of the parent rose 15.8% from the prior-year period to $498.40 million. Normalized profit per share attributable to owners of the parent came in at 56 cents, up 14.3% from the same period the prior year.
Analysts expect GFI’s EPS to come in at $0.80 for the fiscal year ending December 2023. Street expects a marginal year-over-year increase in its revenue for the same year to $4.15 billion.
The stock has declined 3.5% over the past month to close its last trading session at $7.51.
GFI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
GFI has a Value and Quality grade of B. In the 35-stock Miners – Gold industry, it is ranked #5. Click here to see the additional POWR Ratings for GFI (Growth, Momentum, Stability, and Sentiment).
Torex Gold Resources Inc. (TORXF)
Headquartered in Toronto, Canada, TORXF operates as an intermediate gold producer in Mexico. The company primarily holds a 100% interest in the Morelos Gold property located southwest of Mexico City. It also mines silver, copper, and carbon deposits.
On October 3, the company announced that it had received key approval from Mexico’s Secretariat of Environmental and Natural Resources (SEMARNAT) on the culminating environmental permit for the Media Luna Project. It had also received approval to increase the power draw at the site to 45 megawatts. This should boost the company’s operations.
On August 18, TORXF announced the finalization of a credit agreement with a syndicate of Banks, which increases the amount of credit available to $250 million and extends the maturity of the facilities into 2025. This might improve the liquidity position of the company.
For the fiscal second quarter that ended June 30, TORXF’s revenue increased 14.1% year-over-year to $235 million. Its adjusted net earnings rose 20.3% from the prior-year quarter to $57 million. Adjusted net earnings per share improved 20% from the same period the prior year to $0.66.
The consensus revenue estimate of $218.39 million for the fiscal third quarter ended September 2022 indicates a marginal year-over-year increase.
The stock declined 2.8% intraday to close its last trading session at $6.68.
TORXF has an overall A rating, which translates to a Strong Buy in our POWR Ratings system. The stock has a Value grade of A and a Quality grade of B. It is ranked #1 in the Miners – Gold industry.
In addition to the POWR Rating grades we’ve stated above, one can see TORXF ratings for Growth, Momentum, Stability, and Sentiment here.
Want More Great Investing Ideas?
REVISED: 2023 Stock Market Outlook (includes top 7 picks)
GFI shares rose $0.12 (+1.60%) in premarket trading Thursday. Year-to-date, GFI has declined -29.88%, versus a -21.52% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|GFI||Get Rating||Get Rating||Get Rating|
|TORXF||Get Rating||Get Rating||Get Rating|