While gold prices have been declining lately on the strengthening U.S. dollar and rising interest rates, the safe-haven appeal of gold during the current period of macroeconomic uncertainty, geopolitical tension, and decade-high inflation fostered a substantial increase in demand for the yellow metal in the first quarter. The demand for gold rose 34% year-over-year in the first quarter to 1,234t, its highest level since the fourth quarter of 2018, and 19% above the five-year average of 1,039t.
According to the World Gold Council, demand for gold is expected to continue rising this year. Juan Carlos Artigas, the council’s Global Head of Research, said, “It’s a very liquid, useful asset that can improve the performance or asset allocation over the long-term. So, our research strongly indicates that gold is an effective, strict strategic investment. It’s a long-term asset.” Moreover, analysts expect gold prices can hit $2,050 per ounce.
Given this backdrop, we think the stocks of fundamentally strong gold mining companies Centerra Gold Inc. (CGAU), Centamin plc (CELTF), and New Gold Inc. (NGD) might be solid bets this month.
Click here to check out our Gold and Silver Industry Report for 2022
Centerra Gold Inc. (CGAU)
CGAU operates as a gold mining company that acquires, explores, and develops gold and copper properties in North America and globally. The company’s principal project includes the 100% owned Mount Milligan gold-copper mine, located in British Columbia. CGAU is headquartered in Toronto, Canada.
On May 4, CGAU announced a quarterly dividend of CAD0.07 per common share, which is payable to shareholders on June 1. This reflects the company’s ability to pay back its shareholders.
On February 28, CGAU announced that it had completed the acquisition of the Gemfield Resources LLC, owner of the Goldfield District Project, from Waterton Nevada Splitter, LLC. The acquisition is expected to add to the company’s operating capacity.
For its fiscal first quarter, ended March 31,2022, CGAU’s revenue increased 30.5% to $295.22 million. Its adjusted net earnings from continuing operations and adjusted net earnings from continuing operations per common share came in at $56.40 million and $0.19, up 100% and 90% from the prior-year quarter.
The $1.03 consensus EPS estimate for its fiscal year 2022 indicates a 33.8% year-over-year increase. Likewise, the $1.21 billion consensus revenue estimate for the same year reflects a rise of 33.9% from the prior year.
The stock has gained 15.8% in price over the past year and 4% year-to-date to close yesterday’s trading session at $7.99.
CGAU’s strong fundamentals are reflected in its POWR Ratings. The stock has an overall A rating, which equates to Strong Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.
CGAU has a Quality grade of A and a Growth and Value grade of B. It is ranked #1 out of the 38 stocks in the Miners – Gold industry. Click here to see the additional POWR Ratings for CGAU (Momentum, Stability, and Sentiment).
Centamin plc (CELTF)
CELTF, headquartered in Saint Helier, Jersey, explores, mines, and develops precious metals in Egypt, Burkina Faso, Côte d’Ivoire, Jersey, the United Kingdom, and Australia. The company’s principal asset is the Sukari Gold Mine project in the Eastern desert of Egypt.
On March 16, CELTF declared a final dividend of 5 cents per share for the six months ended December 31. The dividend is to be paid bi-annually, subject to the board's and shareholders’ approval. This reflects upon the company’s ability of cash generation.
For its fiscal year ended December 31, 2022, CELTF’s revenue came in at $733.31 million, while its adjusted EBITDA was $328.60 million. Its profit for the year after tax, and cash and cash equivalent balance stood at $153.67 million and $207.82 million, respectively.
Analysts expect CELTF’s revenue to increase 15.1% year-over-year to $844.35 million for its fiscal year 2022.
The stock has declined 1.8% intraday to close yesterday’s trading session at $1.07.
CELTF has an overall B rating, which translates to Buy in our POWR Rating system. The stock has a Stability grade of B. It is ranked #4 in the Miners – Gold industry.
To see the additional POWR Ratings for Growth, Value, Momentum, Sentiment, and Quality, click here.
New Gold Inc. (NGD)
NGD explores for, develops, and operates mineral properties, primarily gold, silver, and copper deposits. The company, headquartered in Toronto, Canada, has its principal operating properties in the Rainy River Mine in Ontario and the New Afton Mine in British Columbia.
On April 11, NGD announced the redemption of its remaining $100 million 6.375% senior notes, due 2025 on May 15. The company expects to fund the redemption from cash on hand.
For its fiscal first quarter, ended March 31, 2022, NGD’s revenue increased 5.9% year-over-year to $174.70 million. Its adjusted net earnings and adjusted net earnings per share came in at $10.30 million and $0.02, respectively, registering an increase of 27.2% and 100% from the prior-year quarter.
The Street $0.04 EPS estimate for the quarter ending September 2022 reflects a 33.3% year-over-year improvement. Likewise, the Street’s $197.82 million revenue estimate for the same quarter indicates a 10% rise from the same period the prior year.
NGD’s shares have gained 1.6% intraday to close yesterday’s trading session at $1.27. It has a Value grade of B. It is ranked #9 in the Miners – Gold industry.
In addition to the POWR Rating grade we have stated above, one can see NGD ratings for Growth, Momentum, Stability, Sentiment, and Quality here.
Click here to check out our Gold and Silver Industry Report for 2022
CGAU shares were trading at $7.94 per share on Wednesday afternoon, down $0.05 (-0.63%). Year-to-date, CGAU has gained 3.95%, versus a -16.92% 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.
3 Gold Mining Stocks to Buy in May: Centerra, Centamin, and New Gold StockNews.com
