Gold is a safe haven against inflation, as its price tends to increase in an unstable economy. Gold prices recently crossed $2,000 and a new record high is on the horizon. Investors could diversify their portfolios and make solid gains by buying quality gold stocks such as Endeavour Mining, B2Gold and Centamin.
In an economic climate of uncertainty due to high inflation, rising rates of interest, and increasing concerns about a possible recession, market professionals and economists view gold as stable and lucrative. This is because gold holds its value over time and maintains your purchasing ability despite currency fluctuations and high inflation.
It is therefore the perfect time to invest in gold stocks with a solid fundamental that include Endeavour Mining plc, B2Gold Corp. and Centamin plc. These companies could provide stability and protection from challenging economic conditions.
The Fed has been increasing interest rates for more than a full year to try and restore price stability. The consumer price index (CPI), which measures inflation, rose by 0.1% in March and 5% over the past year, as opposed to the estimates of 0.2% for the month and 5.1% annually. Although price increases have continued since reaching a four-decade peak last summer, the inflation rate is still above the Fed's 2% target.
Bankrate's quarterly economist survey indicates that the odds of recession in this year are 64%, despite the turmoil of the financial system and the higher interest rates.
Mark Hamrick is a senior economist at Bankrate. He said that while the chances of a recession are high, the recent bank failures, and the resulting flare-up in financial system instability, have raised the downside risks for the economy.
Investors often turn to gold as a stable investment option to mitigate risks during periods of increased economic uncertainty. Gold has traditionally been considered a safe investment, as it maintains its value even in economic downturns. Gold can also be used as a hedge against inflation or market volatility.
Inflation increases the interest of investors in buying gold, which drives up its price. Recently, gold prices have been unstoppable. They are now above $2000 for the first since March 2022. In August 2020, gold reached its highest level of $2 075. Analysts expect gold to surpass its previous high this year.
CMC Markets predicts that a Fed pivot would trigger a drop in bond yields and a fall in the dollar, which will push gold prices to $2,500 to $2,600 an ounce. Randy Smallwood (CEO of Wheaton Precious Metals, WMP) also forecasted that gold prices would reach $2,500 an ounce.
VanEck Gold Miners ETF (GDX), which has gained 32.6% in the last six months, is a good indicator of investor interest.
You can make significant gains by investing in gold stocks with a strong fundamental base, such as EDVMF, BTG and CELTF.
Take a closer view at these fundamentals:
EDVMF is a gold-mining company based in London, United Kingdom. It operates six assets including the Boungou mines, the Hounde mines, the Mana mines, the Wahgnion projects, the Ity project, the Lafigue Project, the Sabodala Massawa mines, the Kalana mines, in Senegal, as well as a portfolio exploration assets in the Birimian Greenstone Belt.
EDVMF’s Sabodala - Massawa expansion and Lafigu e Greenfield project are both on schedule, with 70% of the initial capital committed and 46% respectively.
EDVMF reported net earnings of $4 million for the first quarter ending March 31, 2023. Net earnings per share were $0.02 compared with a net loss of $57,000,000 and $0.23 per share. At quarter-end, EDVMF had $810 million of cash and $285 million available in financing sources.
EDVMF pays $0.81 per share annually. This translates to a yield of 3.09% on the current price. The average yield over the past four years is 1.46%.
Analysts predict that EDVMF will increase its revenue by 7.6% to $2.69 Billion for the current fiscal year, which ends December 2023. The consensus EPS estimate for this year of $2.32 represents a 42.3% increase over the previous year. The company's revenue for fiscal year 2024 is expected to increase by 3.3%, and its EPS will grow 46.6%, to $3.40 and $2.78 billion, respectively.
The stock closed the last trading day at $26.25 after gaining 34.6% in the past six-months and 9.6% for the past year.
The strong fundamentals of EDVMF are reflected by its POWR ratings. The stock's overall rating is B, which corresponds to a buy in our proprietary rating. The POWR ratings assess stocks based on 118 factors, each of which has its own weighting.
EDVMF is rated B for Stability, Quality and Sentiment. It is the fourth-best stock in the B-rated Miners Gold industry.
Click here to view the POWR ratings for EDVMF for Growth, Value and Momentum.
B2Gold Corp. (BTG)
BTG is one of the world's leading gold producers, with mines located in Mali and Namibia. The Fekola Mine is located in Mali. Masbate Mine is in the Philippines. Otjikoto Mine is in Namibia. It also has a 25% stake in Calibre Mining Corp., and a nearly 19% stake in BeMetals Corp. The company is headquartered in Vancouver.
BTG acquired Sabina Gold & Silver Corp. on April 19. B2Gold acquired Sabina’s 100% ownership of the Back River Gold District in Nunavut. Back River Gold District consists of five mineral claim blocks that stretch along an 80-kilometre belt.
The most advanced project, Goose, is de-risked, has been fully permitted and construction ready. It also already has significant infrastructure in place. BTG expects to see its profitability and growth increase with the addition of this high quality, high grade project to their global portfolio.
Cash inflows for the fiscal year ending December 31, 2022 were $595.80 millions. Cash and cash equivalents amounted to $651.95 millions as of December 31 2022. Current assets amounted to $1.04 billion.
BTG pays an annual dividend of $0.16 per share, which translates to a yield of 3.92% on the current stock price. The average yield of its four-year dividends is 2.51%. Over the last three years, its dividend payouts have increased at a CAGR of 109.1%.
Analysts predict that BTG's revenues for the current fiscal year (ending in December 2023) will increase by 9.5% over last year to $1.90 Billion. The company's earnings per share (EPS) for the current year are expected to increase 22% over last year to $0.31. BTG shares have gained 21.4% in the past six-months, closing the last trading day at $4.08.
BTG's POWR Ratings reflect its solid prospects. The stock's overall rating is B, which translates to a Buy according to our proprietary rating system.
BTG is rated A for Quality, and B for Value. It is ranked 5th out of 39 stocks in the B-rated Miners Gold industry. Click here to access BTG's ratings of Growth, Momentum and Sentiment.
Centamin plc (CELTF)
CELTF, based in Saint Helier in Jersey, is engaged in exploration, mining and development of precious materials in Egypt, Burkina Faso and Cote d'Ivoire. It also operates in Jersey, the United Kingdom and Australia. The company is primarily engaged in exploring for gold deposits. Its principal asset, the Sukari Gold Mine Project, covers an area of 160 square kilometers and is located in Egypt's Eastern Desert.
Martin Horgan, the CEO of the company, spoke about the great progress made by the company in 2022. "In terms of growth we achieved our second consecutive year of reserve growth. Across the portfolio, we commenced exploring work across our EDX Portfolio in Egypt and advanced our Doporo PFS, which is expected be completed in the early half of 2023."
He said, "The Company has secured its first sustainability-linked debt facility from a grouping of leading international resource bankers, adding financial flexibility and enabling us to deliver on our identified growth opportunities."
CELTF increased its gold production by 6.2% in the fiscal period that ended December 31st 2022. This amounted to 440.97 Koz. Gold sales at the company increased 7.7% over the past year to 438.64 koz. The company's revenue was $788.4 millions, up 7.5% from the previous year. Profit before tax also grew by 11% to $171 millions.
Analysts predict that CELTF will increase its revenue by 17.5% over the past year to $205,20 million in the first quarter ending March 2023. The consensus revenue estimate for fiscal year 2023 of $874.78 millions represents an 11% increase over the previous year.
The stock closed the last trading day at $1.50, up 33.9% in the past six-months and 30.7% for the year.
CELTF POWR Ratings reflects this positive outlook. The stock is rated B overall, which is equivalent to a buy in our proprietary rating system.
CELTF is rated B for Value, Quality and Stability. It is ranked third out of 39 stocks within the same industry.
We have added CELTF ratings for Growth, Momentum and Sentiment to the POWR ratings. All CELTF ratings are available here.
EDVMF shares traded at $26.25 a share, down $0.06 (0.23%) on Tuesday morning. EDVMF shares have gained 22.45% year-to-date compared to the S&P 500 benchmark index's 7.87% increase during the same time period.
Mangeet became a financial journalist and investment researcher because of her keen interest in the stock markets. Mangeet uses her fundamental approach for analyzing stocks to help investors make informed decisions.