Editor’s Note: This article covers stocks trading at less than $1 per share and/or with less than a $100 million market cap. Please be aware of the risks associated with these stocks.
The present March edition of our gold miners analyst watch series concludes the first year of monthly reporting on analyst price targets and recommendations for gold mining stocks. As always we would like to update our readers on the latest data and will be making comparisons with results published in our February edition.
Unchanged from last month we are considering the following stocks (in alphabetical order): Agnico Eagle (NYSE:AEM), Alamos Gold (NYSE:AGI), Allied Nevada (NYSEMKT:ANV), AngloGold Ashanti (NYSE:AU), Argonaut Gold (OTCPK:ARNGF), AuRico Gold (NYSE:AUQ), B2Gold (NYSEMKT:BTG), Barrick Gold (NYSE:ABX), Eldorado Gold (NYSE:EGO), Gold Fields (NYSE:GFI), Goldcorp (NYSE:GG), Harmony Gold (NYSE:HMY), IAMGOLD (NYSE:IAG), Kinross Gold (NYSE:KGC), Lakeshore Gold (NYSEMKT:LSG), McEwen Mining (NYSE:MUX), New Gold (NYSEMKT:NGD), Newmont Mining (NYSE:NEM), Primero Mining (NYSE:PPP), Randgold (NASDAQ:GOLD), Sibanye Gold (NYSE:SBGL), St Andrew Goldfields (OTCQX:STADF), Yamana Gold (NYSE:AUY).
We duly note that we source our data exclusively from Yahoo.com. Most companies considered for this article are covered by more analysts than reported in our table, but not all of them provide their data to our source website.
The table below summarizes our data. Grey columns represent data sourced directly from Yahoo.com, and light green colored columns represent processed data derived from this source data.
The first three columns list the company names, ticker symbols and share prices at the time of writing, followed by the change in share price since the last edition.
Price targets (low, median and high) are listed in the following three columns. These targets are followed by a column giving the number of analysts providing data to Yahoo.com and the mean recommendations given by these analysts ranging from 1.0 (strong buy) to 5.0 (sell). This concludes the data sourced directly from Yahoo.com.
The remaining columns list data points computed as percentages of the share prices at the time of writing as given in the third column. The column titled "median-price" gives the differences between the share prices and the median target prices. The column titled "high-low" gives the differences between the high and the low targets. The last four columns titled "target change" document the changes in price targets since the January report with the last column giving the average changes over the low, median and high price targets.
N.B. Price targets for St Andrew Goldfields, Lakeshore Gold and Argonaut Gold were provided in Canadian Dollars and converted to US Dollars for the purpose of this article using a conversion rate of C$1.0 = US$0.91.
The following diagram illustrates the change in share price since the last article in our series approximately one month ago. The values illustrate the theoretical gain or loss in share price during this time.
Gold miners' share prices have shown some considerable strength for the second month in a row. On average, we compute an increase of 10.3% throughout our watch list. We are especially proud to point out the grittiest performance of the past month by Sibanye Gold. The share price of this South-African gold miner has risen by 37% since the start of February, and has doubled since we made our bullish call in this article.
St Andrew Goldfield is the only gold miner in our watch list for which we record a lower share price since early February based on an earnings call that failed to satisfy expectations.
As in previous editions, we have kept tabs on the difference between the current share price and the median price target and interpret this difference as a measurement for the potential of a stock. This value is given in column "median-price" and the diagram below. Caution is advised for stocks with recent catalytic events since analysts take their time updating their data on Yahoo.com.
St Andrew Goldfields still has the greatest potential going by this measure; however, we dare say that analysts are still updating their model for this company after the release of the company's plans for 2014.
Interestingly, Sibanye Gold is still bringing up the rear in this ranking. Despite constantly outperforming peers in past months, this gold miner still hasn't convinced analysts, it seems.
Column "high-low" measures the divergence in analyst opinions. The results from this column in the table at the top of this article are visualized in the next diagram.
IAMGOLD, Lakeshore Gold and Allied Nevada seem to cause the greatest degree of divergence in analysts' opinions. The greatest degree of agreement among analysts is noted for South African miners Sibanye Gold and AngloGold Ashanti, and most notably Randgold, which has been posting some impressive results of late.
With earnings season still ongoing, we note some considerable changes in price targets since last month's edition. Harmony Gold and Sibanye Gold received some hefty upgrades, while targets for Barrick Gold and Argonaut Gold received the largest cuts.
On average, targets were increased by 1.8% since early February.
A visualization for column "Recommendation" concludes our report. The little red bars indicate recommendation changes since last month.
Driven by the ongoing earnings season, we note an unusual number of changes. McEwen Mining and Randgold received the largest upgrades in our research universe, while AngloGold Ashanti dropped by the highest margin. B2Gold is still seen most favorably, and Sibanye Gold is least liked by analysts.
Starting with next month's edition, we will have a minimum of one year of analyst data for precious metal miners to look back on. Since analyst targets are typically given with a 1 year timeframe, we will be checking up on the accuracy of predictions.
Disclosure: I am long AEM. 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.