Trading #1 Gold Stocks - Tactical Trading
October 26 2011 - 8:00PM
Zacks
If you don't own any gold stocks, you might want to consider
picking one or two. While the price of the barbarous yellow relic
itself is driven by meaningful global trends in asset and monetary
diversification, its swings will be volatile to trade.
But, buying and trading solid miners with earnings
momentum may be the best exposure to the long-term trend.
Barrick Gold (ABX), the world's biggest producer of the
metal, just reported its third-quarter numbers Thursday with profit
jumping 52 percent as higher prices offset lower production.
Barrick also raised their dividend from 12 cents to
15 earlier in the week. The stock has surged for the past week from
a very nice base of support at $43 to over $49 today, and with a
forward P/E below 10, it could be a solid part of a metals
portfolio.
But I want to consider three smaller names with
more earnings momentum and thus more potential upside...
AngloGold Ashanti (AU) is a $17 billion
producer who claims to be one of the largest at 7 million ounces
per year and holding reserves of 126 million. The company has
operations in six countries on three continents, some of which are
joint ventures, as well as exploration activities in ten countries.
With a forward multiple of 13 times, it's projected to grow
earnings at 60% this year and 66% in 2012. They report November
4.
Gold Fields (GFI), a $12 billion miner, is
one of the world's largest unhedged gold producers with operating
mines in South Africa, Ghana, and Australia. Coming off of 155%
projected EPS growth this year, they are expected to grow profits
by 57% in 2012. The company is expected to report earnings on Nov
10 and is also sporting forward P/E ratio of 13.
Royal Gold (RGLD) is a $3.8 billion
enterprise who characterizes its business as being "engaged in the
acquisition and management of precious metals royalties. They seek
to acquire existing royalties or to finance projects that are in
production or near production in exchange for royalty interests."
With a 32 forward multiple, the company is predicted to grow EPS by
65% in 2011 and next year's estimates call for 19% growth. They
report Nov 3.
My favorite in the bunch is GFI. I recommended it
here back in July at $15.50 when gold was just breaching $1,600 for
the first time ever. In the article and attached video, Gold Headed
to $1,750 Next?, I also looked at Rand Gold (GOLD) as a hot
prospect when it was trading $90.
GOLD is slipping below $110 today, after trying to
make another run at its all-time high near $115. Yet, more proof
that there are lots of good opportunities trading the miners with
solid earnings momentum.
Kevin Cook is a Senior Stock Strategist with
Zacks.com
BARRICK GOLD CP (ABX): Free Stock Analysis Report
ANGLOGOLD LTD (AU): Free Stock Analysis Report
GOLD FIELDS-ADR (GFI): Free Stock Analysis Report
RANDGOLD RSRCS (GOLD): Free Stock Analysis Report
ROYAL GOLD INC (RGLD): Free Stock Analysis Report
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