Commodities & Metals

Looking for Upside in Top Gold Winners and Losers of 2015

underground mining
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Gold for June delivery closed on Friday at $1,203.30 an ounce, up about 6% from its 52-week low around $1,134 an ounce last November. The yellow metal’s 52-week high is around $1,346, about 12% higher than Friday’s close. Since about mid-March, gold has traded in a narrow range around $1,200 an ounce, after dropping to a year-to-date low of around $1,150 an ounce.

Gold mining stocks are not faring that well this year. The top two performing gold mining stocks for 2015 to date have both lost ground over the past 12 months, and the two worst performing gold miners have simply cratered. All have been hit by the strong dollar and the Federal Reserve delay in hiking interest rates, and all have tried to cope with the lack of demand by cutting costs and becoming more efficient.

2015’s best performing gold mining stock is AngloGold Ashanti Ltd. (NYSE: AU), which has gained more than 31%. The stock closed at $11.41 on Friday, in a 52-week range of $7.45 to $18.69. In April of 2011, AngloGold shares traded around $50. In the past 12 months, the stock has lost nearly 35% of its value, dropping just over $6 a share. The company is currently looking to sell its Cripple Creek mine in Colorado and has been approached to sell its stakes in two mines in Mali. AngloGold is currently the world’s third-largest gold miner. Based on Friday’s closing price and the consensus price target of $14.54, upside potential on AngloGold’s shares is over 27%.

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The second-best performing gold mining stock this year is Newmont Mining Corp. (NYSE: NEM), which has seen an increase of about 27% in its share price since January 1. Newmont also posted the smallest 12-month share price decline among the companies we tracked, with a drop of just 0.3%. The stock closed on Friday at $23.57, in a 52-week range of $17.60 to $27.40. Newmont is the second-largest gold producer in the world and has been selling assets, reducing debt and cutting costs. The less-good news is that the company’s dividend has fallen from $1.23 in 2013 to just $0.10. The consensus price target on the stock is $26.15, and based on Friday’s closing price the implied gain is about 11%.

At the other end of the gold miner performance spectrum are the two worst performing stocks so far in 2015.

The second-worst performer is Eldorado Gold Corp. (NYSE: EGO), which has dropped 18.8% since the beginning of the year. Over the past 12 months, the stock is down more than 14% and shares closed Friday at $4.93, in a 52-week range of $4.29 to $8.60. The company has run into difficulties with the Greek government over its project in the country’s Halkidiki region. The country’s minister for energy and the environment is a former senior official in the Greek communist party and believes that private companies should not be allowed to develop the country’s natural resources. Combined with the relatively lower price for gold, Eldorado faces some serious headwinds. Using Friday’s closing price, the potential upside on the stock is about 35%, based on the consensus price target of $6.65.

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The worst performing gold mining stock of 2015 is Kinross Gold Corp. (NYSE: KGC), which has lost more than 19% of its value since the first of the year. Shares are down nearly 45% in the past 12 months and closed Friday at $2.28, in a 52-week range of $2.00 to $4.47. Since April of 2011, the stock has lost 87% of its value. Kinross has been suggested as one of the buyers for AngloGold’s Cripple Creek mine, following the sale of its 40% stake in a Nevada mine recently. Earlier this month, the company suspended operations at a Chilean mine following severe flooding, although Kinross claimed the temporary shutdown would have no impact on regional production guidance for this year. With a consensus price target of $3.52, the company’s potential upside is over 54%, based on Friday’s closing price.