Gold has relatively little use in industry, which leaves its buying and selling to the whim of investors, which is partly the reason gold is such a widely used hedge against currency fluctuations. This is also the reason yellow metal prices are susceptible to monetary policy changes.
Gold prices had fallen to a four-month low in early August to $1,677.90 per ounce due to a rush to buy U.S. dollars in lieu of gold as the Fed signaled a prospective hike in interest rates. However, spot gold prices rebounded quickly to trade at $1,828.74 per ounce earlier this week, its highest price since September. The rebound can be attributed to the central bank’s intention to not raise the benchmark interest rates anytime soon. Furthermore, analysts expect gold prices to be buoyed by a decline in U.S. Treasury yields after this week’s Producer Price Index showed that wholesale inflation is decelerating.
Given this backdrop, we think fundamentally sound gold mining stocks of Centerra Gold Inc. (CGAU), Torex Gold Resources Inc. (TORXF), and Jaguar Mining Inc. (JAGGF) could be solid bets now.
Click here to check out our Gold and Silver Industry Report for 2021
Centerra Gold Inc. (CGAU)
CGAU operates as a gold mining company that acquires, explores, and develops gold and copper properties in North America, Asia, and globally. The company’s principal project includes its 100% owned Mount Milligan gold-copper mine, which is in British Columbia. CGAU is headquartered in Toronto, Canada.
On November 5, CGAU declared a CAD0.07 per common share quarterly dividend, which amounts, payable to shareholders on December 3. This reflects the company’s stable cash position.
For the nine months ended September 30, CGAU’s revenue increased 27.4% to $649.10 million. Its adjusted net earnings from continuing operations improved 305.3% from the same period last year to $113.90 million. And its adjusted net earnings from continuing operations per common share climbed 280% year-over-year to $0.38.
A $1.16 consensus EPS estimate for its next year (fiscal 2022) indicates a 48.7% year-over-year increase. Likewise, the $1.18 billion consensus revenue estimate for the coming year reflects a 17.4% rise from the current year.
The stock has gained 22.7% in price over the past six months and 14.1% over the past month to close yesterday’s trading session at $8.49.
CGAU’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall B rating, which equates 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.
CGAU has a Quality grade of A, and a Value and Sentiment grade of B. In the 49-stock Miners – Gold industry, it is ranked #4. Click here to see the additional POWR Ratings for CGAU (Growth, Momentum, and Stability).
Torex Gold Resources Inc. (TORXF)
TORXF, based in Toronto, Canada, operates as an intermediate gold producer in Mexico. The company also explores for silver, copper, and carbon deposits.
On October 6, TORXF provided updates on the company’s operations on the Media Luna Project, reporting that the company is on track to advance and de-risk the project, including the early works program to access the north and south sides of the Balsas River. This project has the potential to expand the company’s operational capability.
In September, the company provided a multi-year production outlook for the El Limón Guajes mining complex (ELG), which includes the expansion of the El Limón open pit. Annual gold production from the ELG at the midpoint of the outlook range is expected to be at 450,000 ounces in 2022.
For the nine months ended September 30, TORXF’s revenue increased 21.6% year-over-year to $653.80 million. Its adjusted net earnings and adjusted net EPS improved 97.3% and 97.7%, respectively, from the same period last year to $147.60 million and $1.72.Analysts expect TORXF’s revenue to increase 7.5% year-over-year to $853.93 million in the current year (fiscal 2021).
TORXF’s stock has gained 16.8% in price over the past three months to close yesterday’s trading session at $12.10. It has gained 11.2% over the past month.
It is no surprise that TORXF has an overall B rating, which translates to Buy in our POWR Rating system. The stock has an A grade for Value, and a B grade for Growth and Quality. It is ranked #1 in the Miners – Gold industry.
To see the additional POWR Ratings for Momentum, Stability, and Sentiment for TORXF, click here.
Jaguar Mining Inc. (JAGGF)
JAGGF is a junior gold mining company that acquires, explores, develops, and operates gold-producing properties in Brazil. The company, which is headquartered in Toronto, Canada, holds principal assets in the Iron Quadrangle in Minas Gerais, Brazil.
On September 7, JAGGF announced that it had commenced a 6,000m reverse-circulation drilling campaign at the Zona Basal Target (ZBT) in Minas Gerais, near its Turmalina Gold Mine and Mill Complex. Regarding this development, Jon Hill, Vice President, Geology and Exploration, Jaguar Mining, said, "We are confident ZB has the potential to deliver an additional and important oxide mineral resource, as either supplementary mill feed at the Turmalina Mill, leveraging existing excess capacity, or as a stand-alone heap leach facility.” The company reported its plans to advance its high-grade Faina mineral resource on the same day, after positive metallurgical test work results. The company expects this project to contribute significantly to its revenues and support the company’s growth.
JAGGF’s revenue for its fiscal third quarter, ended September 30, came in at $40.75 million. Its net income and EPS stood at $11.42 million and $0.16, respectively. And its adjusted EBITDA came in at $19.21 million for the period.
The Street’s $0.65 EPS estimate for the next year (fiscal 2022) reflects a 43.3% year-over-year improvement. Likewise, the Street’s $168.55 million revenue estimate for the coming year indicates a 11.4% rise from the current year.
The stock has gained 13.8% in price over the past month and 4.9% over the past five days to close yesterday’s trading session at $3.64.
JAGGF’s POWR Ratings reflect this promising outlook. The stock has an overall B rating, which equates to Buy in our proprietary rating system. The stock has a Quality grade of A, and a Value and Momentum grade of B. It is ranked #3 in the Miners – Gold industry.
In addition to the POWR Rating grades we have stated above, one can see JAGGF ratings for Growth, Stability, and Sentiment here.
Click here to check out our Gold and Silver Industry Report for 2021
CGAU shares were trading at $8.42 per share on Wednesday afternoon, down $0.07 (-0.82%). Year-to-date, CGAU has declined -26.77%, versus a 25.20% 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.
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