The 2016 rally in gold mining and production stocks has been massive. Many of the key gold stocks, even those with multi-billion market valuations, have seen their shares rise 150% to 200%. It turns out that a rising tide might not really lift all ships at the same rate. Investors need to realize that the rally that has been seen was quite unexpected at the end of 2015, but that was before Brexit and more quantitative easing and negative rates in Europe and Japan.
24/7 Wall St. has tracked five of the 2016 gold laggards. These stocks have just not kept up with peers. A screen of the gold mining and production stocks from FIVNIZ was filtered down to 23 stocks with a market cap of $300 million or more. All of these are up so far in 2016, but the median gain of the 23 stocks was 188% this year alone.
Basic information on the trading and color has been added on each. Of these five gold laggards, the reality is that it is a sad state of affairs when gains of 34% to 78% are considered laggard. Imagine what might have happened if they had good news.
The media market cap of these 23 companies was $2.9 billion. The median gold stock has a price to book value of almost three times.
Eldorado Gold Corp. (NYSE: EGO) is up only 34% so far in 2016, and up only 23% from this time a year ago. With shares at $4.07, it has a 52-week trading range of $1.87 to $5.167 and a consensus analyst price target of $5.78. Its market cap is $2.9 billion.
In late July, Eldorado Gold reported gold production of 124,110 ounces (versus 181,160 a year earlier) at an average cash operating cost of $607 per ounce (versus $569 in 2015). Its adjusted net earnings for the quarter were $11.7 million, or $0.01 per share (versus $17.0 million and $0.02 in 2015). This stock still screens out as being under book value at 0.82 times.
Goldcorp Inc. (NYSE: GG) was last seen trading up 52% so far in 2016, and up only 31% from this time a year ago. Its share price was around $17.80, with a $15.2 billion market cap. The 52-week range is $9.46 to $20.38, and the consensus price target is $21.38. Goldcorp is valued at 1.13 times book value.
Perhaps this is one of the situations in which size does matter. It is one thing for investors to chase a market cap of hundreds of millions or even a few billion, but the $15 billion market cap means that each 1% gain equates to $150 million in theoretical net stock purchasing. Earnings were not that impressive, with lower production and a reported loss in the second quarter. Goldcorp said that an accelerated organizational restructuring had a short-term, negative impact on its gold production.
Seabridge Gold Inc. (NYSE: SA) is up over 59% so far in 2016, and while this is a huge lag, it is actually up 240% from this time a year ago. The consensus price target is $15.83, and the 52-week range is $4.55 to $15.88. The market cap is $703 million, and shares are valued at 3.2 times book value.
Seabridge may be less known to American investors as it is based in Canada, but its two major projects are in British Columbia and Northwest Territories. The company is also just 17 years old, and this is a full breakdown of its resources and assets by project.
NovaGold Resources Inc. (NYSEMKT: NG) has seen its shares rise 61% so far in 2016, and they were up 117% from this time last year. Shares were last trading at $6.85. The consensus price target is down at $4.14. The 52-week range is $3.05 to $7.29, and the market cap is $2.2 billion. This one is said to be valued at six times book value.
In July, NovaGold’s earnings report had a net loss of $9.1 million (or −$0.03 per share). This company’s operations are in Alaska and in British Columbia, Canada. NovaGold’s 2016 outlook said:
In 2016, we continue to expect to spend approximately $25 million, including $9 million to fund our share of expenditures at the Donlin Gold project, $1 million at the Galore Creek project, $1 million for our share of joint Donlin Gold studies with Barrick, $12 million for general and administrative costs and $2 million for working capital and other corporate purposes.
Randgold Resources Ltd. (NASDAQ: GOLD) has a true conundrum on its hands, because a 2016 gain of 78% year to date (and up over 83% from a year ago) should be celebrated. Perhaps it has the same size issue as Goldcorp due to a market cap of $10.3 billion. Its $110.00 share price compares with a consensus analyst target of $112.98 and a 52-week range of $54.88 to $126.55.
Morgan Stanley lowered its rating to Underweight from Equal Weight in late July. Still, Jefferies was quite positive on Randgold. The company operates in Sub-Saharan Africa, and it is valued at 3.06 times book value.