Gold has always been considered a safe haven to store value when financial markets are volatile. Besides physical gold, many investors prefer to gain exposure to the metal by owning gold mining stocks. 2020 has been a year in which markets have remained highly volatile. Hence, gold mining stocks have been in demand. With a total return of more than 34% over the past year, the VanEck Vectors Gold Miners ETF (GDX) has outperformed the S&P 500 index.
In addition, gold prices rose above $1900/oz for the first time in the past six weeks, alongside a steep fall in the U.S. dollar; these are favorable conditions for gold mining stocks. Moreover, the Federal Reserve’s dovish stance and the approval of a $900 billion stimulus package by the U.S. Congress is expected to spur another rally in the precious metal prices.
Analysts expect the momentum to continue as we move into 2021. Yamana Gold Inc. (AUY – Get Rating), Alamos Gold Inc. (AGI – Get Rating), and Buenaventura Mining Company Inc. (BVN – Get Rating) are three gold miners whose stocks are likely to benefit the most.
AUY is a Canadian precious metal miner of gold and silver. Argentina’s Cerro Moro mine, Brazil’s Jacobina mine, the Canadian Malartic mine, Chile’s El Penon, and Minera Florida mines are the producing mines for AUY.
AUY has completed the integration of the Agua Rica project with the Minera Alumbrera plant. The integrated project will now be known as the MARA Project. This new project delivers enhanced efficiencies and is one of the least capital intense mining projects globally as measured by pounds of copper produced and in-situ copper mineral reserves.
During the third quarter ended September 30, 2020, AUY’s revenue climbed 22.8% year-over-year to $439.4 million. EPS for the quarter fell to $0.06 from $0.21 posted in the same period last year. AUY’s revenue per ounce of gold increased 29.7% year-over-year to $1910. And during the quarter, the company also posted operating cash flow of $215 million, the highest level since 2015. Meanwhile, AUY’s net debt declined 19.4% year-over-year to $619.1 million.
Analysts expect AUY’s EPS to increase 266.7% year-over-year to $0.11 for the quarter ended December 31, 2020. On a year-to-date basis, AUY surged 44.3% to end yesterday’s trading session at $5.70. Over the past six months, the stock climbed 13.3%.
How does AUY stack up for the POWR Ratings?
B for Trade Grade
B for Peer Grade
B for Overall POWR Rating.
It is ranked #2 of 30 stocks in the Miners – Gold industry.