Gold prices hit record highs recently due to ongoing geopolitical tensions and declining inflation. Gold prices have soared since the beginning of the year due to persistent buying by central banks worldwide, its reputation as a safe-haven asset, expectations of interest rate cuts this year, and rising consumer spending on gold as an investment.
Given the yellow metal’s promising prospects, investors could consider buying fundamentally strong gold stocks such as Eldorado Gold Corporation (EGO), Alamos Gold Inc. (AGI), and Centerra Gold Inc. (CGAU).
In the first quarter of 2024, total gold demand, including OTC buying, rose 3% over the prior-year quarter to 1,238t, marking the strongest first quarter since 2016. The jewelry segment also observed healthy growth, with jewelry fabrication growing by 1% year over year to 535t.
Gold’s unprecedented surge has been propelled by Chinese speculators, who have been purchasing gold at an unprecedented rate due to a weak Yuan and concerns about China’s economic recovery. Additionally, there is a robust demand for bullion from China.
The lingering geopolitical tensions, which continue to impact market sentiments globally, are further bolstering gold’s demand, making it a compelling investment option. Gold's appeal as a safe-haven asset during these geopolitical uncertainties and the expected easing of monetary policies in the coming months is likely to boost its demand further.
Rosenberg Research’s David Rosenberg believes gold looks poised to hit $3,000 per ounce.
Considering these conducive trends, let’s examine the fundamentals of the three featured Miners - Gold stocks.
Stock #3: Eldorado Gold Corporation (EGO)
Headquartered in Vancouver, Canada, EGO mines, explores, develops, and sells mineral products primarily in Turkey, Canada, Greece, and Romania. The company primarily produces gold, as well as silver, lead, and zinc.
EGO’s trailing-12-month CAPEX / Sales of 45.25% is 485.8% higher than the industry average of 7.72%. Likewise, its trailing-12-month EBIT margin and net income margin of 19.11% and 11.45% are 82.6% and 142.3% higher than the industry averages of 10.46% and 4.73%, respectively.
EGO’s revenue for the fiscal first quarter that ended March 31, 2024, increased 13.2% year-over-year to $257.97 million. Its earnings from operations rose 85.7% from the year-ago quarter to $60.10 million.
Moreover, its adjusted net earnings from continuing operations stood at $55.20 million, up 230.5% over the prior-year quarter. Also, its adjusted net earnings per share from continuing operations increased 200% from the year-ago quarter to $0.27.
Analysts expect EGO’s revenue and EPS for the quarter ending June 30, 2024, to increase 32.7% and 180% year-over-year to $305.03 million and $0.25, respectively. The company surpassed the Street EPS estimates in each of the trailing four quarters. Over the past nine months, the stock has gained 90.1%, closing the last trading session at $16.52.
EGO’s strong fundamentals are reflected in its POWR Ratings. It has an overall rating of B, equating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
It has a B grade for Growth. It is ranked #12 out of 43 stocks in the Miners - Gold industry. Click here for the additional POWR Ratings of EGO (Value, Momentum, Stability, Sentiment, and Quality).
Stock #2: Alamos Gold Inc. (AGI)
Headquartered in Toronto, Canada, AGI acquires, explores, develops, and extracts precious metals in Canada and Mexico. The company primarily explores gold deposits.
AGI’s trailing-12-month CAPEX / Sales of 33.31% is 331.3% higher than the industry average of 7.72%. Similarly, its trailing-12-month Return on Common Equity and Return on Total Capital of 7.12% and 7.08% are 20.6% and 44.3% higher than the industry averages of 5.90% and 4.91%, respectively.
For the fiscal first quarter that ended March 31, 2024, AGI’s operating revenues and free cash flow stood at $277.60 million and $24.40 million, up 10.4% and 132.4% year-over-year, respectively. For the same quarter, its adjusted net earnings and earnings per share increased 12.8% and 8.3% from the year-ago quarter to $51.20 million and $0.13, respectively.
Street expects AGI’s EPS and revenue for the quarter ending June 30, 2024, to increase 21.7% and 7.5% year-over-year to $0.18 and $280.53 million, respectively. The company surpassed consensus EPS estimates in each of the trailing four quarters and consensus revenue estimates in three of the trailing four quarters.
AGI has gained 51.6% over the past nine months, closing the last trading session at $17.25.
AGI’s POWR Ratings reflect its robust prospects. It has an overall B rating, equating to Buy in our proprietary rating system.
AGI has a B grade for Sentiment and Quality. Within the same industry, it is ranked #8. Get AGI’s Growth, Value, Momentum, and Stability ratings, here.
Stock #1: Centerra Gold Inc. (CGAU)
Headquartered in Toronto, Canada, CGAU acquires, explores, develops, and operates gold and copper properties in North America, Turkey, and internationally. It explores gold, copper, and molybdenum deposits.
On February 14, 2024, CGAU announced an agreement with Royal Gold, extending the Mount Milligan Mine's life to 2035 and increasing cash payments for gold and copper production starting around 2030. The agreement also supports future mine life extensions and enhances operational optimization.
CGAU’s trailing-12-month EBITDA margin of 28.85% is 75.9% higher than the industry average of 16.41%. Its trailing-12-month gross profit margin and levered FCF margin of 40.22% and 35.77% are 41.9% and 576.2% higher than the industry averages of 28.35% and 5.29%, respectively.
CGAU’s revenue for the fiscal first quarter that ended March 31, 2024, increased 35% year-over-year to $305.80 million. The company’s free cash flow stood at $81.20 million, compared to a free cash deficit of $105.90 million in the year-ago quarter.
In addition, its adjusted net earnings stood at $31.30 million and $0.14 per share, compared to an adjusted net loss of $52.90 million and $0.24 per share in the prior-year quarter.
For the quarter ending June 30, 2024, CGAU’s revenue is expected to increase 67.6% year-over-year to $309.18 million. Its EPS for fiscal 2024, is expected to grow 975% year-over-year to $0.54. It surpassed consensus revenue estimates in three of the trailing four quarters. The stock has gained 43.4% over the past three months to close the last trading session at $7.50.
CGAU’s POWR Ratings reflect this positive outlook. It has an overall rating of A, equating to a Strong Buy in our proprietary rating system.
CGAU has an A grade for Value and a B for Growth, Sentiment, and Quality. It is ranked first in the Miners - Gold industry. Click here to see CGAU’s ratings for Momentum and Stability.
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AGI shares were trading at $17.03 per share on Wednesday morning, down $0.22 (-1.28%). Year-to-date, AGI has gained 26.66%, versus a 12.00% rise in the benchmark S&P 500 index during the same period.
About the Author: Neha Panjwani
From her school days, Neha harbored a profound fascination for finance, a passion that steered her toward a career as an investment analyst following the completion of her bachelor's degree in commerce. Currently enrolled in the CFA program, Neha is dedicated to further enriching her comprehension of investment fundamentals. Neha's primary objective is to aid retail investors in discerning optimal investment opportunities by diligently evaluating crucial aspects of financial instruments, with a primary focus on stocks and ETFs. Her commitment lies in empowering individuals to make informed and strategic investment decisions in the dynamic world of finance.
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