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3 Gold Stocks Beating the Market in 2023

Barchart - Thu Oct 26, 2023

Gold has a long-standing and well-established reputation as a safe-haven investment. Whenever a macroeconomic or geopolitical crisis flares up, or there's an unexpected surge in market volatility, chances are good you'll see investors flocking towards the yellow metal as an alternative investment. Not only is gold viewed as less risky than equities, it also boasts a reputation as a store of value and hedge against inflation.

Recently, with geopolitical tensions still simmering in the Middle East and bond yields surging to their highest in 16 years, the December gold futures contract (GCZ23) peaked above the $2,000 mark late last week - and briefly vaulted above this major round-number level in today's trading, too. With the macro environment increasingly shaky, the SPDR Gold Shares (GLD) - the massive physical gold ETF - has risen more than 4% over the past month, even as the S&P 500 Index ($SPX) has dropped more than 3%.

Against this backdrop, here's a look at some of the best gold mining stocks to consider in the current environment - names that are not only recommended by analysts, but are outperforming both GLD and the broader equities market so far in 2023. Plus, Wall Street predicts more upside for these stocks from here.

Equinox Gold

Founded in 2010, Equinox Gold (EQX) is a Canadian gold mining company with interests in the U.S., Brazil, and Mexico. Equinox currently produces approximately 2 million ounces of gold per year, and is one of the largest gold producers in the world. 

EQX commands a market cap of $1.41 billion, and the stock is up almost 37.5% on a YTD basis. That compares favorably to a gain of 8.6% for GLD and 8% for the S&P 500 so far this year.

Looking ahead, EQX is slated to report its Q3 results early next week, on Oct. 31. The company's Q2 revenues came in at $271.6 million, up 21% from the previous year, while the loss per share of $0.02 was narrower than the year-ago period - and surpassed Wall Street's expectations, too. Gold production increased by 14% to 137,661 ounces in Q2, while average realized gold prices in the quarter were $1,962 (+5.7% YoY).

Separately, the company's Greenstone project remains on track to be operational in the first half of 2024. Equinox, which owns a 60% interest in the mine, expects annual production of 400,000 ounces and grade at 1.27 grams per ton - significantly above the global average of 0.5 gram per ton. Notably, with the commencement of operations in the Greenstone project, Equinox's annual production is expected to reach the 1 million ounces mark.

Overall, analysts remain optimistic about the stock, with a consensus “Moderate Buy” rating and a mean price target of $6.17. This denotes an upside potential of roughly 37% from current levels. Out of nine analysts covering the stock, 3 have a “Strong Buy” rating, and 6 have a “Hold” rating.

Eldorado Gold

We continue with another Canadian mining company, Eldorado Gold (EGO). Founded in 1992, Eldorado operates mines in Turkey, Greece, Romania, and Canada. Eldorado Gold is one of the world's largest gold producers, with a production of approximately 1.6 million ounces of gold in 2022. 

EGO's market cap currently stands at $2.1 billion, and the shares have gained more than 19% on a YTD basis to comfortably outpace the broader market.

Investors should stay tuned after the bell tonight, when Eldorado is scheduled to report its results for Q3. Consensus estimates are calling for EGO to swing to a small profit in the quarter, and the miner has surpassed bottom-line estimates in each of its past three quarterly reports. Revenue is expected to arrive at $249.36 million.

Eldorado may also provide updates on itsSkouries mines project in Greece, which was previously said to be on track for gold production starting in 2025. The company expects the mine to produce 140,000 ounces of gold and 67 million pounds of copper annually from this mine. Further, the project is forecasted to generate free cash flows of $217 million for the first five years.

Analysts have an average “Moderate Buy” rating on EGO, with a mean target price of $11.55 - indicating an upside potential of 16% from current levels. Out of 10 analysts covering the stock, 4 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, 4 have a “Hold” rating, and 1 has a “Moderate Sell” rating.

Kinross Gold

We conclude with Kinross Gold (KGC), which has the added bonus of offering a dividend to shareholders, at a current yield of 2.26%. Toronto-based Kinross has operations in the U.S., Russia, Ghana, and Brazil, and a number of exploration projects underway in other countries, as well, with an annual output of 2 million ounces. 

KGC commands a market cap of $6.52 billion, and the stock is up 30% YTD.

Earnings for Q2 were impressive, as the company clocked growth in all the key metrics. Kinross reported revenues of $1.1 billion, up 33% from the previous year, while EPS jumped to $0.14 in the same period - besting the consensus estimate of $0.09. Production rose 22% from the year-ago period to 555,036 ounces, and the average realized gold price increased by 5.56% to $1,976 per ounce.

Apart from its flagship mines in Chile and Brazil, Kinross is betting on two other noteworthy projects - the Great Bear Project in Red Lake, Canada, and the Manh Choh Project in Alaska. The Great Bear project is expected to commence gold production in 2029 and has an initial indicated resource of 2.7 million ounces and an inferred resource of 2.3 million ounces with plans to to reach an annual production of 5 million ounces and expand its resource base to 10 million ounces. Meanwhile, the Manh Choh Project is expected to produce 640,000 attributable gold equivalent ounces. and is on track to begin production in the second half of 2024.

Analysts have a “Moderate Buy” rating on KGC with a mean target price of $5.96. This denotes an upside potential of about 14% from current levels. Out of 14 analysts covering the stock, 7 have a “Strong Buy” rating, 1 has a “Moderate Buy” rating, 5 have a “Hold” rating, and 1 has a “Moderate Sell” rating.

On the date of publication, Pathikrit Bose did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.

Provided Content: Content provided by Barchart. The Globe and Mail was not involved, and material was not reviewed prior to publication.

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