Major Gold Miner Poised For A More Prosperous Year In 2013

| About: Newmont Mining (NEM)

"That is gold which is worth gold." - George Herbert

Gold miners have been an underperforming sector in 2012. Despite a steady gold price, miners have lost 20% compared to the price of gold over the last year (See chart) mainly due to inflation in mining costs and some major strikes. One large gold miner, Newmont Mining (NYSE:NEM), has picked up some recent positive comments from analysts. Its shares are cheap and the stock looks poised for a much better year in 2013.

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Key recent catalysts for Newmont Mining:

  • BMO Capital Markets just reiterated its Outperform rating and $67.50 a share price target on the shares, around 50% above the current stock price.
  • Barclays also initiated the shares as a "Buy" six weeks ago.
  • After being slightly down in FY2012, revenues are expected to increase in the low double digit range for FY2013. Consensus earnings estimates for FY2013 have risen 2% over the last three months.
  • The stock looks like it has technical support at this level (See Chart)

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Newmont Mining Corporation produces gold and copper from its assets located in the United States, Australia, Peru, Indonesia, Ghana, New Zealand, and Mexico.

4 additional reasons NEM is solid value play at just over $45 a share:

  1. The median price target held by the 18 analysts that cover the stock is $68 a share.
  2. NEM yields 3% and has more than tripled its dividend payouts over the past five years.
  3. The stock is selling near the bottom of its five year valuation range based on P/E, P/S, P/CF and P/B.
  4. NEM is priced at just 9x forward earnings, a discount to its five year average (15.7)

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in NEM over the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.