In the first part of 2024, gold's appeal shines as bright as ever. The precious metal is hanging out near record highs, and with inflation still running hot even as the Fed plans to start cutting interest rates, gold remains a solid pick for investors seeking a reliable hedge from the economic roller coaster. While some experts warn that gold likely won't deliver big returns outside of a crisis scenario, central bank buying is expected to push asset prices higher. Goldman Sachs (GS) sees gold prices around $2,175 an ounce this year, while UBS (UBS) experts are calling for highs around $2,200.
Gold for April delivery (GCJ24) already exceeded that UBS forecast at its peak earlier this month, and the weaker U.S. dollar remains supportive. Meanwhile, the SPDR Gold Shares (GLD) just recorded its second consecutive week of net inflows. Against this backdrop, investors seeking exposure to the precious metal might consider one gold mining stock that not only pays a regular dividend - it also has considerable upside potential, too.
About Barrick Gold Stock
Barrick Gold Corporation (GOLD) is the second-largest gold miner in the world, behind only Newmont Mining (NEM). Barrick is a top gold producer, and the company also has copper interests located in major mining regions all over the globe. Their widespread operations - ranging from Nevada to the Congo - give them a solid and diversified base for production.
Looking at the past year, GOLD's stock has been on a bit of a roller coaster. The shares are off roughly 16% over the past 52 weeks, although they've recovered from a double bottom near the $14 level.
At current levels, GOLD is reasonably valued. The stock is priced at 16.29 times forward adjusted earnings, compared to the materials sector median of 16.68. Plus, the current valuation is a discount to the stock's five-year historical earnings premium of 22.85.
Similarly, GOLD is valued at 2.21x forward sales, which compares favorably to its five-year average of 3.44x.
And when it comes to dividends, Barrick Gold is all about giving back to its shareholders. Based on the quarterly payout of $0.40 per share, the stock yields 2.58% at current levels. With a payout ratio of 47%, these payments are well-covered by GOLD's earnings.
Barrick Gold's Investment Appeal
Barrick's Q4 2023 earnings, announced on Feb. 14, beat the Street with earnings per share (EPS) of $0.27. That said, revenue was a tad lower than analysts expected, coming in at $3.06 billion instead of the predicted $3.13 billion, and Barrick issued cautious gold production guidance for the full year.
Simultaneously, management authorized a new $1 billion buyback plan. Along with GOLD's dividend, this share repurchase plan confirms the company's commitment to boosting shareholder returns.
Looking ahead, analysts are estimating Barrick to report earnings per share (EPS) of $0.19. That's a hefty jump of 35.71% from the year-ago quarter. For the whole of fiscal 2024, the consensus among analysts is that EPS will arrive at $0.90, up 7.1% year-over-year, with continued growth to $1.10 per share in fiscal 2025.
What Do Analysts Expect for GOLD Stock?
Barrick Gold has a consensus rating of “Moderate Buy” from the 17 analysts throwing in their two cents. The breakdown of these ratings is 10 “Strong Buys,” 2 “Moderate Buys,” and 5 “Holds.” This group has gotten more bullish recently; three months ago, Barrick had only 7 “Strong Buy” ratings.
The mean target price is $20.90 for GOLD stock, which indicates expected upside potential of 34% from Monday's closing price.
