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JPMorgan says these 3 gold stocks could rise 40% (or more)
Let’s talk about gold. Precious metal is a traditional safe haven investment, backed by its use – years, thousands of years ago – as a reliable store of value. Investors traditionally buy heavily in gold to protect their portfolios and protect their assets, and the price of gold is sometimes used as a proxy (albeit the opposite) for general economic health. In a recent report, investment company, JPMorgan took a look at the state of the gold industry, particularly the gold mining industry. Analyst Tyler Langto has pointed out the underlying contradiction in two basic facts about gold mines. “Over time, in the commodity business, the lowest cost producers with the longest life assets are the relevant winners … Gold mines, when compared to base metals, usually have very short mines (sic) life, and gold miners Focus on changing reserves to maintain product levels, ”Langton noted. At first glance, Langton’s paradox seems to point away from heavy investments in gold mines. After all, these are high-risk commodity producers. But the current times are really very good for gold miners. Prices are higher than in recent years; The metal is now trading below just 8 1,800 per ounce, but it reached above $ 2,000 at the Corona shutdown in August last year, down from 200 1,200 just 18 months ago. The current high prices are good for manufacturers. Langtone believes that for current prices support, gold and gold mines are seen as a hedge against ‘macro uncertainty’. He believes that “key interest rates remain low for a long time and stimulus measures related to Covid-19 will continue to expand the central bank’s balance sheets.” Against this background, Langton and his associates have begun to select gold mining stocks, seeing them as winners in the current environment. Surprisingly, they prefer companies that show discipline on M&A activity, focus on free cash flow, and offer solid returns to shareholders. Using the TipRanks database, we have pulled out details on their most recent elections. Are they as good as gold? Analysts think so; All are buy-rated and potentially offer significant upside. Let’s dig. Kinros Gold Corporation (KGC) First Up, Kinros Gold, is a mid-cap company – valued at .. 6.6 billion – with active mining operations in the US, Brazil, West Africa and Russia. Together, these operations have proven and potential gold reserves of 29.9 million ounces. The company is heading for a total production of 2.4 million ounces in 2021, which will increase to 2.9 million ounces by 2023. The company’s profit includes a selling price of Rs 90,790 and a low-cost talking price of Rs 1,025 per tonne. . With gold currently trading at 78,782 on the Commodity Exchange, the near-term success of Kinros is evident. Two sets of statistics highlight the profitability of Kinoros. First, the company’s recent record of quarterly results shows steadily rising revenue and earnings. With the exception of the decline in 1Q20, at the beginning of the Corona crisis, Kinoros ’revenue has been steadily rising since early 2019 – and even in 2020, each quarter showed a year-over-year increase. After paying dividends after 7 years, Kinros used his strong performance in recent months to restore the company’s dividends. Payments are still made irregularly, but after announcing that dividends will be paid again in September 2020, two payments have been made and a third has been announced for March of this year. Each payment is made for 3 cents per share, which translates to a modest yield of 1.6%. The key issue here is not the strength of yields, but, the confidence that management has shown in the near-mid-term through resume dividend payments. Based on current production forecasts, payments are expected to continue until 2023. Tyler Langtone, in his note on Kinross, concludes: “Given its expected growth project and the pipeline of additional projects, we think Kinros will be able to maintain an average annual production of 2.5 mm. In the next decade. The company has an attractive price profile, and we expect costs to decrease over the next few years. The company should also produce FCF at an attractive strong level at current gold prices, and we expect Canrose to divert this cash to internal development projects and its dividends. In line with these comments, it selects Kinoros as JPM’s ‘top pick in the gold sector’ and rates the stock as overweight (i.e. bye). Their $ 11 price target indicates a 61% side downtrend potential in the coming year. (To view Langton’s track record, click here) Based on a 6 to 2 split between buy and hold reviews, Kinros gets a strong buy recommendation from the analyst’s consensus. Analysts on Wall Street have set an average price target set of 11.25, which is slightly higher than Langton’s, and will make a one-year side close of 64.6%, compared to the current trading price of 85.685. (See KGC Stock Analysis on Tipranx) SSR Mining, Inc. (SSRM) Moving north to Canada, let us now take a look at the Vancouver-based SSR Mining. It is the second mid-cap mining company to produce gold and silver in bulk through four active mines in Canada, the US, Argentina and Turkey. Canadian, U.S. And the Turkish operation produces mainly gold, while the Pune operation is Argentina’s largest silver mine. However, despite SSRA losing estimates at both the top and bottom in its last quarterly report, for 2020 full-year production numbers, the company met the previously determined guidance. Year-on-year gold production hit 643,000 ounces, up 1% from the total in the fourth quarter. Silver production at the Pune mine reached 5.6 million ounces, beating the guidance figure. The fourth quarter production was 39% of the total. Last November, the company announced that it would launch a dividend policy starting 1Q21. The ‘base dividend’ will be set at 5 cents per share or 1% yield; Like the KGC above, the main issue is not whether the dividend is high or low, but how management starts paying it off – a sign of confidence in the future. “Based on current gold price forecasts, we estimate that SSR will produce 400 mm FCF in 2021 and approximately 500 mm by 2022-2024,” Langton wrote, relying on SSRM’s assessment of its strong free cash flow forecast. Furthermore, starting at the 2021 base, we estimate that SSR will generate a cumulative FCF of 2021-2003 USD 2021-2025 or about 59% of its current market cap … ”Corresponding to his comments, Langto put an overweight (buy) rating on the stock. On, with a price target of 12 24, which indicates a 60% side decline for the next 12 months. (To see Langton’s track record, click here) There have been 8 recent reviews on SSRM shares – and buy each one of them, here making the Strong by Analyst consensus rating unanimous. The stock is trading at. 15.25, and its strong $ 28.78 average price target indicates a high of 89% a year. (See SSRM stock analysis on Tipranx) Newmont Mining (NEM) Last on the list, Newmont is the world’s largest gold miner, with a market cap of .7 45.78 billion, and active production in a variety of metals, including gold, silver, and copper. Zinc, and lead. The company has assets in North and South America, Africa and Australia Australia – both operations and prospects, and is the only gold miner listed on the S&P 500. Given these last details, it is worth noting that NEM’s shares have risen 29%. In the last 12 months – more than 16% growth of S&P over the same period. In 3Q20, the company reported revenue of 3. 12 3.12 billion. While this forecast has been missed, it has improved by 5.4% over the previous year’s Q3. Q3 results were also company records, with a free cash flow of 1.3 billion dollars. The results following expectations were a common pattern for the company’s 2020 performance even in Q1 and Q2. The frustrating consequences of the Corona crisis, but also the frustrating results, were year-over-year. Newmont has an active capital return program for shareholders. Since the beginning of 2019, the company has used both dividends and share repurchases to return 2. 2.7 billion in capital to shareholders. This past January, Newmont announced it would continue to buy શેર 1 billion worth of shares. Looking ahead to 2021, the company also announced a new dividend framework, set the base payment at ડ 1 per share per annum, and reiterated its commitment to capital return. Michael Glick of JPM led the note on Newmont, acknowledging the company’s strong production, saying: “We are predicting gold production thanks to NEM to be around 6.5-6.7 mm in time compared to the 2021-220 time frame …” Prospects Glick added, “In terms of production, the ongoing expansion at Tanami should share additional production and lower cash costs starting in 2023. In addition, we expect Newmont to approve its Ahafo North and Yanachocha sulfide projects this year, about three of the projects.” Glick likes Newmont’s FCF and production numbers, using them to back up its weighted (buy) rating. Their $ 83 price target indicates a 46% upside for the coming months. (To see Glick’s track record, click here) Newmont, for all its strength, still receives a moderate buy rating with analyst consent. This is based on 8 reviews, including 5 buy and 3 hold. The average price target is $ 74.97, indicating room for a 31% increase from the current trading price of 56.99. (See NEM Stock Analysis on Tipranx) Disclaimer: The opinions expressed in this article are those of specialized analysts only. Content is intended for informational purposes only. It is very important to do your own analysis before making any investment.
