Strong U.S. economic data and a consequent rise in bond yields have been creating selling pressure on gold. A sharp increase in new home sales in the United States, record high output at manufacturing and services sectors, a decline in unemployment, and strong consumer spending signal a rapid economic recovery. As a result, the non-interest-bearing yellow metal is losing its appeal as a safe-haven asset. A strengthening U.S. dollar is another major factor that is diminishing the metal’s attractiveness.
However, experts say renewed import demand from India and China could offer some support to gold in the near future. Furthermore, gold prices are likely to strengthen going forward due to global inflationary pressure. Analysts believe that gold prices have yet to factor in an increase in inflation.
Given this backdrop, Wall Street analysts expect gold mining stocks, Kinross Gold Corporation (KGC), and B2Gold Corp (BTG), and Yamana Gold Inc. (AUY) to advance more than 30% over the next 12 months.
Kinross Gold Corporation (KGC)
KGC is a Canadian miner that acquires, explores, and develops gold properties in the United States, Brazil, Chile, Ghana, and Mauritania. The company also extracts and processes gold-containing ores and reclaims gold mining properties.
Of seven analysts that have rated KGC, six rated it Buy and one rated it Hold. Also, the $10.49 consensus price target represents a potential 42.7% upside.
During the fourth quarter ended December 31, 2020, KGC produced 624,032 ounces of gold, indicating a 3.4% year-over-year decline. The company’s free cash flow at the end of the quarter was $382.8 million. KGC’s metal sales for the quarter climbed 19.9% year-over-year to $1.2 billion. And its EPS for the quarter rose to $0.62 from $0.40 posted in the same period last year. KGC’s three largest producing mines of KGC—Paracatu, Kupol and Tasiast—accounted for 62% of KGC’s production and were the lowest cost mines in its portfolio in 2020, for the second consecutive year.
Analysts expect KGC’s revenue for the quarter ended March 31, 2021 to be $1.1 billion, representing a 28.15% year-over-year growth. EPS during the period is expected to grow 70% to $0.17.
KGC ended Friday’s trading session at $7.35, surging 7% over the past year. The stock has declined 14.6% over the past six months.
It’s no surprise that KGC has an overall rating of B, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.
KGC has a B grade for Value, Momentum, and Quality. In the C-rated Miners – Gold industry, it is ranked #8 of 41 stocks.
In addition to the grades we’ve just highlighted, one can see the KGC ratings for Stability, Growth, and Sentiment here.
B2Gold Corp (BTG)
BTG explores for and develops gold and mineral properties in Nicaragua, Philippines, Namibia, Burkina Faso, and Chile.
Of nine covering analysts, seven have rated BTG a Buy, while two have rated it Hold. Also, the $7.45 consensus price target represents a potential upside of 46.9%.
BTG’s total gold production in the first quarter, ended March 31, 2021, was 220,644 ounces, surpassing its budget by 9%. The company’s consolidated gold production from its three operating mines during the quarter ending March 31 was 205,643 ounces, representing a 17% year-over-year increase. The was attributable to higher waste reduction activities at its Fekola and Otjikoto mines.
Its consolidated gold revenue during the period declined 4.7% year-over-year to $362 million, due to a 16% decline in gold sold. However, this was partially offset by an 11% increase in the average realized gold price.
A consensus revenue estimate for the second quarter ended June 30, 2021 stands at $424.8 million, signaling a 3.9% year-over-year decline. Its EPS for the quarter is expected to decline 18.2% year-over-year to $0.09.
BTG declined 2.3% over the past year to close Friday’s trading session at $5.07. Over the past six months, the stock lost 24.8%.
BTG’s solid prospects are reflected in its POWR Ratings. The stock has an overall B rating, which equates to Buy in our proprietary rating system. BTG has an A grade for Quality, and a B grade for both Value and Momentum. In the Miners – Gold industry, it is ranked #11.
In addition to the POWR Rating grades we’ve just highlighted, one can see the BTG’s ratings for Stability, Growth, and Sentiment here.
Yamana Gold Inc. (AUY)
AUY is a Canada-based miner engaged in gold mining and related activities in Brazil, Chile, Argentina, Mexico, and Canada.
Of nine analysts that have rated AUY, six rated it Buy. Also, the $6.65 consensus price target indicates a potential upside of 39.4%.
In the fourth quarter, AUY produced 255,361 gold equivalent ounces (GEO), including 221,659 ounces of gold and 2.59 million ounces of silver, with production during the quarter exceeding its sales by more than 7,000 ounces of gold. During the quarter, AUY completed the integration of its Agua Rica project with the Minera Alumbrera, which together is now known as the MARA project. Its net debt declined by nearly $53 million from the third quarter.
Analysts expect AUY’s revenue for the year ending December 31, 2021 to be $1.9 billion, representing a 18.8% year-over-year rise. Its EPS during the period is expected to grow to $0.32.
AUY ended Friday’s trading session at $4.77, rising 1.1% over the past year. During the past six months, the stock declined 17.7%.
Due to its bright prospects, AUY has an overall B rating, which translates to a Buy in our POWR Rating system. AUY has a Value, Momentum, and Quality Grade of B. In the same industry, it is ranked #10.
Click here to see the additional POWR Ratings for AUY (Stability, Growth, and Sentiment).
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KGC shares were trading at $7.34 per share on Monday morning, down $0.01 (-0.14%). Year-to-date, KGC has declined 0.00%, versus a 12.11% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education. More...
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