Peter Ashton is vice-president of retail and self-directed investing at Recognia Inc.
What are we looking for?
Canadian gold miners poised to pop.
In an article posted to Bloomberg.com recently, reporter Nicholas Larkin described how over the past 20 years, the price of gold averaged gains of 3 per cent in September, beating next-best month November by a wide margin. This seasonality is partly attributed to India's festival period, which runs from August to October – a busy time for the purchase of gold as jewellery. If bullion surges this September as it has done in the past, it could boost the share prices of Canadian gold mining stocks.
The screen
We will be using Recognia Strategy Builder to search for well-rated Canadian gold miners trading significantly off their 52-week highs.
We begin by setting a minimum market capitalization threshold of $1-billion to focus on larger, more established companies in the market. Next, we will look for companies that are trading at least 15 per cent off their 52-week highs and therefore having room to appreciate.
Finally, in order to select companies with strong fundamentals and outlooks, we will be using analyst consensus ratings to consider only stocks rated either "buy" or "strong buy."
More about Recognia
Recognia is a global leader in quantitative and technical analysis. It is accessible by more than 20 million investors and traders worldwide through leading retail online brokers. Recognia covers 85 exchanges worldwide, and analyzes 65,000 instruments daily including stocks, indexes, ETFs, currencies and futures.
What did we find?
Yamana Gold Inc. ranks No. 1 on our screen and also has the highest market cap, at $8-billion. Yamana is a mid-tier Canadian gold producer with operations in Brazil, Argentina, Chile, Mexico and Colombia.
Alamos Gold Inc. produces gold primarily in Mexico but also has operations in Turkey and the United States. The stock is off more than 45 per cent from its 52-week high of $17.76, achieved last September.
Primero Mining Corp. is a gold and silver producer with operations in Canada and Mexico. The stock is off more than 20 per cent from its 52-week high. However, on Aug. 26 the relative strength index (RSI) of the stock dropped below 30, signalling that the stock may be oversold.
Historical performance
Recognia Strategy Builder provides a backtesting capability to evaluate how well an investing strategy would have worked in the past. Using a five-year historical period with quarterly rebalancing, the screen described had a 13.9 per cent annualized return compared to 7.2 per cent for the S&P/TSX composite index.
The investment ideas presented here are for information only. Investors should conduct further research before investing.
Well-rated Canadian gold miners trading significantly off their 52-week highs
| Rank | Company | Ticker | Market Cap. ($-bil) | % chg from 52-wk high |
|---|---|---|---|---|
| 1 | Yamana Gold Inc. | YRI-T | 8.0 | -30.4% |
| 2 | Alamos Gold Inc. | AGI-T | 1.2 | -45.2% |
| 3 | First Majestic Silver Corp. | FR-T | 1.3 | -36.1% |
| 4 | B2Gold Corp. | BTO-T | 1.9 | -25.7% |
| 5 | New Gold Inc. | NGD-T | 3.5 | -17.6% |
| 6 | Detour Gold Corp. | DGC-T | 2.1 | -15.6% |
| 7 | Primero Mining Corp. | P-T | 1.2 | -20.4% |
| 8 | Torex Gold Resources Inc. | TXG-T | 1.3 | -17.6% |
| 9 | AuRico Gold Inc. | AUQ-T | 1.2 | -17.8% |
| 10 | Capstone Mining Corp. | CS-T | 1.1 | -17.9% |