Gold has retreated sharply from its March highs due to the higher rates and a stronger dollar. The high rates have restricted gold’s rise beyond the $1,800 per ounce mark. However, according to RBC Capital Markets, heightened geopolitical tensions and safe-haven undercurrents could propel gold prices above $2,030 an ounce.
Conventionally, gold is considered a store of value and a safe haven asset. The yellow metal is a physical commodity with a restricted quantity, allowing it to retain its value even during economic turmoil. Gold is also seen as an inflation hedge.
Moreover, Bytetree Asset Management chief investment officer Charlie Morris believes gold could push to $7,000 by the end of the decade. He also stated that he sees interest rates close to peaking, which might give the metal a push in the right direction.
Hence, we think these fundamentally strong gold mining stocks, Torex Gold Resources Inc. (TORXF), GCM Mining Corp. (TPRFF), and Jaguar Mining Inc. (JAGGF), might be solid buys to hedge one’s portfolio against the uncertain macroeconomic backdrop.
Torex Gold Resources Inc. (TORXF)
Headquartered in Toronto, Canada, TORXF operates as an intermediate gold producer in Mexico. The company primarily holds a 100% interest in the Morelos Gold property located southwest of Mexico City. It also mines silver, copper, and carbon deposits.
On August 18, TORXF announced the finalization of a credit agreement with a syndicate of Banks, which increases the amount of credit available to $250 million and extends the maturity of the facilities into 2025. This might improve the liquidity position of the company.
On July 7, TORXF announced results from its resource expansion and exploratory drilling completed in the broader Media Luna area. Jody Kuzenko, President & CEO, stated, “A key pillar of the Torex strategy is a renewed focus on drilling and exploration, and our latest drilling results at the Media Luna Cluster reinforce our positive outlook on our ability to complement future production at Media Luna.”
For the fiscal second quarter that ended June 30, TORXF’s revenue increased 14.1% year-over-year to $235 million. Its adjusted net earnings rose 20.3% from the prior-year quarter to $57 million. Adjusted net earnings per share improved 20% from the same period the prior year to $0.66.
The consensus revenue estimate of $228.87 million for the fiscal third quarter ending September 2022 indicates a 5.4% year-over-year increase.
The stock has declined marginally intraday to close its last trading session at $7.43.
TORXF’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to a Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
TORXF has a Value and Quality grade of A and a Stability grade of B. In the 53-stock Miners – Gold industry, it is ranked #1.
Click here to see the additional POWR Ratings for TORXF (Growth, Momentum, and Sentiment).
GCM Mining Corp. (TPRFF)
TPRFF, headquartered in Toronto, Canada, acquires, explores, develops, and operates on gold and silver properties, primarily in Colombia. The company holds interests in the Segovia operations, the Zancudo project, and the Marmato project.
On August 18, TPRFF and Aris Gold Corporation (ALLXF) announced that they had filed a joint management information circular and related meeting materials. The meeting is to approve the proposed business combination of TPRFF and Aris Gold. The combined entity is expected to operate as Aris Mining Corporation with an increased scale and diversification.
On August 17, TPRFF declared a monthly dividend of CA$0.015 per common share, payable to shareholders on September 15. This reflects upon the cash generation ability of the company.
TPRFF’s revenue increased 5.2% year-over-year to $101.37 million for the fiscal second quarter of 2022. Net income came in at $38.97 million, up 30.8% from the same period the prior year. Free cash flow stood at $20.48 million, up substantially from its negative year-ago value.
Street revenue estimate for the fiscal year 2022 of $404.90 million indicates a 5.8% year-over-year improvement.
The stock has declined marginally intraday to close its last trading session at $2.48.
It’s no surprise that TPRFF has an overall B rating, which translates to Buy in our POWR Ratings system. It has an A grade for Value and a B grade for Stability and Quality. TPRFF is ranked #2 in the Miners – Gold industry.
To see the additional POWR Ratings for Growth, Momentum, and Sentiment for TPRFF, 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, headquartered in Toronto, Canada, holds principal assets in the Iron Quadrangle in Minas Gerais, Brazil.
On June 10, JAGGF announced a notice for a normal course issuer bid to purchase for cancellation up to 3,623,640 common shares in the capital of the company. The company intends to enhance long-term shareholder value by purchasing and canceling common shares at a discount to their underlying value.
For the fiscal second quarter ended June 30, JAGGF’s revenue increased 4.4% year-over-year to $37.93 million. Net income and EPS improved 218.1% and 225% from the prior-year period to $9.48 million and $0.13.
The consensus EPS estimate of $0.32 for the fiscal year 2023 indicates an 82.9% year-over-year increase. Likewise, the consensus revenue estimate for the same year of $161.39 million reflects a rise of 10.8% from the prior year.
JAGGF’s shares have gained marginally intraday to close its last trading session at $2.22.
This promising prospect is reflected in JAGGF’s POWR Ratings. The stock has an overall B rating, equating to Buy in our proprietary rating system. JAGGF 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’ve stated above, one can see JAGGF ratings for Growth, Stability, and Sentiment here.
TORXF shares were trading at $7.17 per share on Thursday morning, down $0.26 (-3.46%). Year-to-date, TORXF has declined -30.92%, versus a -17.20% 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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