Commodities & Metals

6 Gold Stocks Still Look Very Cheap Even as Gold Challenges $1,800

Jon C. Ogg

Published: June 30, 2020 3:41 pm

Last Updated: July 1, 2020 8:13 am

The gold bugs must be happy again. With gold trading just under $1,800 again, the gold bugs are going to be increasing their calls for gold to rise to $2,000. Some have even been publishing reports showing how gold could go much higher.

Some of the reasons will be obvious: uncertainty, massive fiscal stimulus with trillions of new dollars created out of thin air, a promise of low interest rates, national strife and so on. Rather than spending so much time touting the shiny yellow metal, some investors are going to wonder which of the well-known gold mining stocks still have upside.

First and foremost, most of the large gold miners are making their longer-term assumptions on $1,200 or slightly better prices per ounce. It is impossible to make bets based on current prices, just like oil companies lightened up making major investments for oil above $100 and $120 per barrel a decade earlier.

24/7 Wall St. has looked through the major gold stocks to see which ones still have significant upside ahead. No one can of course dictate that these stocks will run higher, but one way of looking at “discount” is seeing if a stock is still trading well under its yearly high and whether or not the Refinitiv consensus analyst price target is also much higher than the current stock price. We have also added in a criterion that above-consensus targets had to be made in recent weeks.

As a reminder, analyst calls alone should never be used for any decision making without additional due diligence and research. It is also important to understand that this article is being featured solely for the case of break-out upside targets rather than based on the complexities of each group of analyst calls.

Newmont Corp. (NYSE: NEM) is the largest of the gold plays after the Newmont-Goldcorp merger. After a 3% gain to $61.25, its 52-week high is $69.13 and its consensus analyst price target is $72.94. Deutsche Bank raised its target to $74 from $70 back on June 17. It was also a favorite when JPMorgan was very bullish on gold.

Barrick Gold Corp. (NYSE: GOLD) is the second largest of the gold plays after its acquisition of Randgold in Africa. Barrick Gold was last seen trading up 3% at $26.90 on Tuesday. That is versus a 52-week high of $28.50 but its consensus analyst price target was last seen up at $30.18. Barrick’s price target was raised to $35 from $34 by Deutsche Bank on June 17, and Raymond James also stuck with its $32 target on the same day.

The rest of the miners at solid discounts to their highs and handily under their Refinitiv consensus analyst target prices have been provided in alphabetical order.

Agnico Eagle Mines Ltd. (NYSE: AEM) was up 25 at $63.60 on Tuesday, versus a 52-week high of $69.66 and versus a consensus analyst price target of $69.84. TD Securities has a $76 target price in comparison.

Hecla Mining Co. (NYSE: HL) is often considered more of a silver play by some investors and it is more speculative. With a gain of almost 5% at $3.20, its 52-week high is $3.66 and its consensus price target is $3.51. B. Riley FBR raised its target price on Hecla to $5.30 from $5.00 in mid-May. That said, Canaccord Genuity said to sell Hecla in mid-April.

Kinross Gold Corp. (NYSE: KGC) was last seen up almost 3% at $7.20, down from a high of $7.67 and versus an $8.52 consensus analyst target price. Kinross saw its target raised to $8.50 from $8.00 by Raymond James on June 16 and CIBC set a $9.00 price target in mid-May.

Wheaton Precious Metals Corp. (NYSE: WPM) had also historically been counted more as a silver play. Wheaton was up 3% at $43.65, and its 52-week high is $47.15 and its consensus price target is up at $46.03. TD Securities had a $54 price target for Wheaton on last look.

Below is the chart for each from StockCharts.com.