Can Gold’s Shine Catch Up to Gold Mining Stocks?

April 7, 2015 by Paul Ausick

gold bars
Source: Thinkstock
Since posting a recent low of around $1,148 an ounce in mid-March, gold prices have increased by more than 6%, returning to the yellow metal’s price at the end of February. The year-to-date high of around $1,310 is still well above Monday’s closing price of $1,218.60.

The largest gold mining stocks — with one exception — reached their year-to-date peaks at about the same time that gold did in late January. Since then, these stocks have watched share prices tumble by anywhere from 8.5% to 29.0%. Since mid-March, just one has roughly matched the performance of the metal itself.

For the year to date, the best-performing senior gold mining stock is Franco-Nevada Corp. (NYSE: FNV). Shares are up 6.3% since mid-March, but just 2.6% year-to-date. The company’s market cap is about $8 billion, and its forward price-to-earnings (P/E) ratio is currently a heady 63.10. The consensus analyst price target on the stock is $58.73, and shares closed Monday at $51.38. The potential gain comes in around 14%.

ALSO READ: 5 Top Gold Stocks in 2015 Q1

The best-performing gold mining stock for the year to date is Newmont Mining Corp. (NYSE: NEM). Shares are up nearly 19%, but just 0.5% since mid-March. Newmont also trades about 10 times the volume of Franco-Nevada, with nearly 8.8 million shares changing hands every day compared, with about 890,000 shares Franco-Nevada. Newmont’s market cap is about $11.3 billion, and its forward P/E is 17.19. The consensus price target is $26.03, and shares closed most recently at $22.58, implying a potential upside of about 15.3%.

The largest gold miner by market cap is Goldcorp Inc. (NYSE: GG), with a market value of $15.7 billion. The company said Monday that it would sell its 40% interest in a Nevada mine to 60%-owner Barrick. That boosted the share price by about 4% on the day. Year to date, shares are trading up about 4.2%, as well as up about 2.3% since mid-March, after dipping by nearly 3% at the end of March. Goldcorp’s price target is $26.12, and shares closed Monday at $19.31, implying a potential gain of about 35%. The forward P/E ratio is 21.38.

Barrick Gold Corp. (NYSE: ABX) is the second-largest gold miner measured by market cap. It is valued at around $14.7 billion, and the stock’s consensus price target is $13.61. Shares closed at $12.61 on Monday, and the potential upside based on those numbers is about 7.9%. Barrick’s forward P/E ratio is 15.13. Barrick’s stock price has soared about 18% since mid-March and is up about 16.5% on the year to date.

The SPDR Gold Shares ETF (NYSEMKT: GLD) has gained about 2.7% year-to-date and is up nearly 5% since mid-March. The shares were trading around $116.50 on Tuesday, in a 52-week range of $109.67 to $129.21.

ALSO READ: How to View and Value Gold in a Rising Dollar Environment

Sponsored: Want to Retire Early? Here’s a Great First Step

Want retirement to come a few years earlier than you’d planned? Orare you ready to retire now, but want an extra set of eyes on your finances?

Now you can speak with up to 3 financial experts in your area for FREE. By simply clicking here you can begin to match with financial professionals who can help you build your plan to retire early. And the best part? The first conversation with them is free.

Click here to match with up to 3 financial pros who would be excited to help you make financial decisions.