Gold investors have been on a roller coaster ride since the onset of the COVID-19 pandemic. It crashed heavily during the initial sell-off and then rebounded sharply to reach record levels. The yellow metal’s price hit an all-time high of $2,070 in August 2020. Thus, gold miners also benefitted.
While the mass vaccination and expected economic recovery led to some corrections, experts believe that the precious metal will quickly return to its rally as the economy is far from where it needs to be. Moreover, as the easy monetary policy is not expected to reverse anytime soon, there could be an inflationary situation, and this could drive the demand for gold as a hedge against inflation.
Though the Federal Reserve hasn’t expressed concerns over current inflation levels, analysts believe that there could be inflationary headwinds in the near-term. Also, as the central bank pumps a massive amount of money into the system as a stimulus measure, the Dollar might weaken. This could further boost the demand for gold.
Gold’s return to its rally will directly benefit gold miners. As a result, I believe, it is wise to add fundamentally sound gold mining stocks such as Kinross Gold Corporation (KGC), Jaguar Mining Inc. (JAGGF), Gold Fields Limited (GFI), and DRDGOLD Limited (DRD) to your portfolio.
Kinross Gold Corporation (KGC)
KGC is engaged in the acquisition, exploration, and development of gold properties primarily in the United States, Canada, Chile, Ghana, the Russian Federation, Brazil, and Mauritania. It is also involved in the extraction and processing of gold-containing ores as well as reclamation of gold mining properties; and production and sale of silver.
During the fourth quarter that ended December 31, 2020, KGC’s metal sales rose 19.9% year-over-year to $1.2 billion. EPS for the quarter climbed to $0.62 from $0.41. The company produced 624,032 Au eq. oz of gold. Three largest producing mines – Paracatu, Kupol and Tasiast – accounted for 62% of the production. KGC ended the quarter with $1.2 billion in cash and cash equivalents.
Higher gold output at KGC’s Fort Knox and Northern Star Resources Ltd.’s Pogo is expected to help Alaska gold production to continue to increase during 2021. Those are the two highest producing gold operations in the state.
Analysts expect KGC’s revenue for the quarter ending March 31 2021 to be $1.2 billion, indicating a 34.9% increase year-over-year. EPS for the quarter is likely to surge 90% to $0.19.
KGC ended yesterday’s trading session at $6.93, gaining 9.7% over the past year. During the past six months, KGC has declined 24.4%.
KGC’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which translates to Buy in our proprietary ratings system. The POWR Ratings are calculated by taking into account 118 different factors with each factor weighted to an optimal degree.
It has a grade of B for Value, Momentum, Value, and Quality. It is ranked #10 out of 46 stocks in the B-rated Miners – Gold industry.
In total, we rate KGC on eight different levels. Beyond what we stated above, we also have given KGC grades for Growth, Stability and Sentiment. Get all the KGC ratings here.
Jaguar Mining Inc. (JAGGF)
JAGGF, a junior gold mining company, engages in the acquisition, exploration, development, and operation of gold producing properties in Brazil. Turmalina Gold Mine Complex and Caete Gold Mine Complex located in the Iron Quadrangle in the state of Minas Gerais are its principal assets. JAGGF also holds an option agreement to acquire a package of 28 exploration tenements covering an area of approximately 27,141.75 hectares situated in Minas Gerais, Brazil.
During the fourth quarter that ended December 31, 2020, JAGGF’s gold production climbed 12.5% over the year to 22,532 oz. Both mines saw significant improvement from the prior year production levels with Pilar up 25% and Turmalina up 20%. The company commenced its Exploration Program at Corrego Brandão in December 2020.
JAGGF’s revenue for the third quarter that ended September 30, 2020 surged 89.1% year-over-year to $43.4 million. EPS for the quarter climbed to $0.23 from $0.02 posted in the same period last year.
Analysts expect JAGGF’s revenue for the year ending 2020 to be $157.1 million, indicating a 61.6% increase year-over-year. EPS for the year is likely to decline 26.8%.
Over the past year, JAGGF soared 319.2% to end yesterday’ trading session at $7.45. During the past six months, the stock has climbed 15.7%.
JAGGF’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which equates to Strong Buy in our proprietary ratings system. JAGGF has a grade of A for Quality and a B for Growth and Value. It is ranked #1 in the Miners – Gold industry.
Click here to see the additional POWR Ratings for JAGGF (Momentum, Stability, and Sentiment).
Gold Fields Limited (GFI)
GFI operates as a gold producer with reserves and resources in Chile, South Africa, Ghana, Australia, and Peru. It holds interests in nine operating mines with an annual gold-equivalent production of approximately 2.2 million ounces. It also owns gold mineral reserves of approximately 51.3 million ounces and mineral resources of approximately 115.7 million ounces.
GFI’s normalized profit for the year that ended on December 31, 2020 increased 156.2% year-over-year to $879 million. EPS for the year increased to $1 from $0.09 posted in the same period last year. For the half year that ended June 30, 2020, GFI recorded 2.236 million ounces of attributable gold production. The company witnessed $868 million of mine cash flow for the quarter.
Analysts expect GFI’s revenue for the year ending December 31 2022 to be $4 billion, indicating a 2.2% decrease year-over-year. EPS for the quarter is likely to drop 9.8% to $1.20.
GFI rose 13.1% during the past year to close yesterday’s session at $9.04. Over the past six months, the stock has dropped 31.3%.
GFI’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of B, which equates to Buy in our proprietary ratings system. GFI’s has a grade of B for Growth, Value and Momentum. In the Miners – Gold industry, it is ranked #12.
In addition to the POWR Ratings grades I’ve just highlighted, you can see GFI’s ratings for Quality, Sentiment, Stability, and Quality here.
DRDGOLD Limited (DRD)
DRD is a gold mining company, engaged in the surface gold tailings retreatment business in South Africa. The company primarily recovers gold from surface tailings in the Witwatersrand basin in Gauteng province. DRD is involved in the exploration, extraction, processing, as well as smelting activities.
During the year six months that ended December, 2020, DRD’s revenue climbed 41% year-over-year to R2.98 billion, driven by the average Rand gold price rising 42% higher at R988,998/kg. The operating profit doubled to R1.4 billion. The higher gold price significantly offset the impact of a 2% decline in overall gold production, due to a 6% lower production of 715kg at Far West Gold Recoveries (FWGR).
The consensus revenue estimate for the year ending June 30, 2021 is $370.7 million, indicating a 3.1% decrease year-over-year. Meanwhile, EPS is likely to decline 51.5% to $0.48.
Over the past year, DRD climbed 28.2% to end yesterday’ trading session at $9.79. During the past six months, the stock declined 32.7%.
DRD’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall rating of A, which translates to a Strong Buy in our proprietary ratings system. DRD has a grade of B for Growth, Value, and Momentum. It is ranked #4 out of 46 in the Miners – Gold industry.
Click here to see the additional POWR Ratings for DRD (Stability, Sentiment and Quality).
Want More Great Investing Ideas?
KGC shares were trading at $6.72 per share on Tuesday afternoon, down $0.21 (-3.03%). Year-to-date, KGC has declined -8.45%, versus a 2.77% 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...
More Resources for the Stocks in this Article
|Ticker||POWR Rating||Industry Rank||Rank in Industry|
|KGC||Get Rating||Get Rating||Get Rating|
|JAGGF||Get Rating||Get Rating||Get Rating|
|GFI||Get Rating||Get Rating||Get Rating|
|DRD||Get Rating||Get Rating||Get Rating|