It’s been painful several months for investors in the Gold Miners (GDX – Get Rating) as they’ve watched nearly every major asset class soar while most gold producers have struggled even to tread water.
This has undoubtedly put a severe dent in sentiment in the sector, but it’s also left many names trading at their most attractive looking valuations since the 2018 lows relative to the gold (GLD – Get Rating) price. In fact, some of the juggernauts in the sector are currently trading at less than 10x FY2021 estimated free cash flow and barely 12x earnings, with these valuations typically being reserved for dying businesses.
Unless the gold is set to drop below $1,600/oz, this looks to be a buying opportunity, but the key is hunting down the best names in the sector. In this article, we’ll look at a few stand-out names that offer both long-term growth and valuations that bake in a significant margin of safety.
(Source: Author’s Chart)