Gold futures (GCM24) broke out to new record highs to close out the week, extending a recent rally for the precious metal. Along with voracious buying by central banks, and increased demand for gold as an inflation hedge, the malleable metal caught a boost today on its safe haven credentials. With geopolitical tensions flaring up between Iran and Israel, gold peaked today north of $2,400 an ounce before paring its gains, and is now up more than 12% on the year - outperforming the S&P 500 Index ($SPX), which has added 8%.
Against this supportive backdrop, analysts at Bank of America earlier this week raised their price forecast for the precious metal. “Gold remains one of our favorite metals and we expect prices to average US$2,500/oz by the fourth quarter, potentially hitting US$3,000/oz by 2025," wrote the analysts. "Notably, demand from central banks and China’s retail buyers has been strong. If Western investors join the party on rate cuts, the yellow metal will move a leg higher; this may also be necessary if sentiment in China improves, and less investment flows into gold.”
One way to add exposure to gold right now is by scooping up shares of low-priced gold mining and streaming stocks. Here are three gold stocks under $10 that have earned “Strong Buy” ratings from Wall Street.
Gold Stock #1: Sandstorm Gold
Established in March 2007, Sandstorm Gold (SAND) holds royalty rights on gold, silver, copper, and other metals mining operations globally. The company operates through multiple segments representing various gold and metals projects around the world. Its market cap currently stands at about $1.6 billion.
SAND stock is up 6.2% on a YTD basis, and it offers a dividend yield of 0.82%.
Sandstorm's results for the latest quarter were impressive, with both revenue and earnings showing YoY growth. Revenues for the quarter came in at $44.5 million, up 15.9% from the previous year. Meanwhile, the company reported EPS of $0.08, compared to a loss of $0.01 per share in the year-ago period. The quarterly earnings surpassed the consensus estimate for EPS of $0.02.
Further, the company's attributable gold equivalent ounces of 23,250 ounces rose by 6.9% from the previous year.
One appealing aspect of Sandstorm is its diversity of assets, with the top 5 assets accounting for only 40% of its Net Asset Value (NAV) - and the next five assets after that only account for an additional 20% of the company's NAV. This compares favorably to its peers like Franco-Nevada (FNV), Osisko Gold Royalties (OR), Royal Gold (RGLD), and Wheaton Precious Metals (WPM), where 60%-65% of the company's NAV comes from its top 5 assets.
Additionally, along with gold, Sandstorm also has access to the third-largest copper (HGK24) mine in the world, which is Antamina in Peru. Sandstorm's 1.66% Ag stream and 0.55% NPI on Antamina give the company and its shareholders appreciable and long-life exposure to one of the largest mining operations on the planet.
Analysts have a consensus rating of “Strong Buy” for SAND stock, with a mean target price of $7.28. This indicates an upside potential of about 36.3% from current levels. Out of 11 analysts covering the stock, 7 have a “Strong Buy” rating, 3 have a “Moderate Buy” rating, and 1 has a “Hold” rating.
Gold Stock #2: Hecla Mining Company
Founded in 1891, Hecla Mining Company (HL) is primarily a silver (SIK24) producer with a focus on lead and zinc, though it's got expanding gold operations in Canada, as well. It has a long history in the mining industry, making it one of the oldest continuously operating silver mines in the United States. HL currently commands a market cap of about $3.42 billion.
Hecla stock is up 10.6% on a YTD basis, and offers a dividend yield of 0.45%.
Hecla results for the latest quarter came in light, as revenues of $160.69 million were down 17.5% from the previous year. Further, the company reported a loss of $0.04 per share, compared to EPS of $0.02 in the previous year.
Although the company reported a decline in silver (down 19% YoY) and gold (down 15% YoY) produced in the quarter, overall in 2023, the company "reported the second largest silver reserves, largest gold resource, and second highest silver production and revenues in our history despite the Lucky Friday losing five months of production due to a fire," said Phillips S. Baker Jr, President and CEO.
Overall, for 2024, the company expects to see silver production come in above 17.5 million ounces, with gold production expected between 105,000 to 125,000 ounces. Analysts expect HL to return to profitability this fiscal year, with the consensus forecast calling for a profit of $0.04 in 2024.
Analysts consider Hecla stock a “Strong Buy,” with a mean target price of $6.34 - which denotes an upside potential of about 19.2% from current levels. Out of 8 analysts covering the stock, 7 have a “Strong Buy” rating and 1 has a “Hold” rating.
Gold Stock #3: B2Gold Corp
Founded in 2005, B2Gold Corp (BTG) is a gold producer with operating mines in Nicaragua, Mali, and the Philippines. They focus on acquiring, developing, and operating low-cost gold mines with an eye toward geographical diversification. Its market cap currently stands at $3.7 billion.
BTG stock is down 8.2% on a YTD basis. However, the stock offers a dividend yield of 2.82%, which is more generous than the sector median of 1.879%.
B2Gold reported a decline in both revenue and earnings for the latest quarter. Revenues of $511.97 million were down 13.6% from the previous year, while EPS fell even more sharply, off 36.4% to $0.07.
Although the company reported a decline in ounces of gold sold (down 46% YoY), the average realized gold price improved to $1,991/ounce from $1,746/ounce in the previous year.
Notably, B2Gold has a roughly 1-million-ounce annual production level along with 7 million ounces of likely mined reserves (5.4 million in proven reserves at producing mines, plus another 1.5 million in expected production from Back River in Canada), and perhaps another 3 million in likely convertible ounces from the measured and indicated category. Further, the company also recently revealed that it will spend an additional $450 million to get production up and running at its Canadian Back River assets by early 2025.
Analysts are bullish about B2Gold, and have a consensus rating of “Strong Buy” for the stock with a mean target price of $4.06. This indicates an upside potential of about 40% from current levels. Out of 12 analysts covering the stock, 8 have a “Strong Buy” rating, 2 have a “Moderate Buy” rating, and 2 have a “Hold” rating.
