In the midst of the volatile market environment right now, many investors have rediscovered an interest in safe-haven assets. With the U.S. economy stubbornly resilient in the face of the Fed's rate-hike campaign, and the conflict between Israel and Gaza still in focus, gold prices have made quite a few advances above the $2,000 level recently.
During October alone, December gold futures (GCZ23) rose about 7%, while the S&P 500 Index ($SPX) pulled back.
Looking ahead to 2024, many analysts expect the bullish price action in precious metals to continue - and one way to tap into this trend is by scooping up shares of related stocks. So, which gold stocks have serious upside potential from here? Here's a look at three low-priced commodity plays that Wall Street recommends.
Hecla Mining: A Top Precious Metals Producer with a Diversified Portfolio
Hecla Mining Company (HL) proudly stands as the largest silver producer in the United States, but that's not their only specialty. With operations spanning four mines in the U.S. and one in Mexico, this company mines silver, gold, lead, and zinc. They're also busy with exploration and pre-development ventures in Alaska, Nevada, Quebec, and Mexico.
Hecla shares are down 11.8% on a year-to-date basis, but the stock has popped alongside gold futures recently, up 3.7% in the last month. The stock offers a 0.54% dividend yield.
For the quarter ending June 2023, the company posted earnings of $0.03 per share, surpassing the anticipated breakeven result. For the upcoming Nov. 6 earnings release, Wall Street is looking for a bottom-line loss of $0.02 per share.
Looking further out, analysts' earnings estimates start to improve. After expected losses for the current quarter and fiscal 2023, HL is projected to be profitable in the following fiscal year, netting $0.10 per share.
Analysts have given Hecla Mining stock a resounding "strong buy" endorsement, with seven out of eight recommending a “strong buy,” and just one advising a hold. The mean target price for Hecla stands at $6.21, suggesting a significant 52% potential gain from the current valuation.
B2Gold: A Low-Cost Gold Miner with a Healthy Dividend
B2Gold (BTG) hails from the Great White North as a Canadian gold producer, boasting three operational mines in Mali, Namibia and the Philippines, plus a string of exploration and development projects scattered worldwide. This company holds a solid track record of cranking out robust production, solid cash flow growth, and throwing a sweet dividend bone to its shareholders.
BTG has rallied alongside gold futures recently, with its 10.4% advance over the past month pushing the shares to a 2023 gain of 6.1%.
The second quarter of 2023 saw B2Gold outdoing Wall Street's expectations, raking in $0.07 per share in earnings to edge past the $0.06 consensus estimate. Pumping up the excitement further, they lifted their quarterly dividend by a whopping 50% to $0.04 per share, and BTG now yields 4.95%.
Ahead of the Nov. 8 earnings release, current quarter estimates stand at $0.07 per share, with fiscal year EPS projected to rise to $0.29 per share.
The analyst squad is singing B2Gold's praises, with eight out of 11 calling it a “strong buy,” two suggesting a “moderate buy,” and one saying “hold.” The mean target price is $5.25, signaling a cool 65% upside from the current price tag.
Coeur Mining: A Mining Stock with a Major Expansion Project
Coeur Mining (CDE) is based out of Chicago, and primarily specializes in the production of silver and gold. They have principal North American properties in Mexico, Alaska, and Nevada, with a South American outpost in Bolivia. CDE also has exploration and development projects scattered across North and South America.
On a year-to-date basis, CDE has underwhelmed with a declined of 36.5%, even though the shares are up 11.9% in the past month alone.
CDE just marked some key milestones at its Rochester expansion project in Nevada, including the first silver and gold production. This expansion project boasts a handsome estimated after-tax net present value (NPV) of $1.3 billion and an internal rate of return (IRR) of 28% based on silver at $25 per ounce and gold at $1,500 per ounce.
Ahead of the Nov. 8 earnings release, the average Wall Street estimate projects a loss of $0.02 per share, with a loss of $0.17 per share expected for the full fiscal year. For FY 2024, CDE is expected to book a profit of $0.12 per share.
Among analysts, Coeur Mining has a “moderate buy” rating overall, with two out of five suggesting a “strong buy,” two advocating for a “moderate buy,” and one advising a “hold.” The mean target price is $4.05, hinting at 80% upside potential from the current price.
Conclusion
In summary, these three stocks present an intriguing opportunity for investors looking to take part in additional expected upside in gold prices and gold stocks. All of these names have a low per-share price tag, upbeat growth forecasts from analysts, and positive long-term earnings projections - making them mining stocks worth considering around current levels.
On the date of publication, Ebube Jones did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
