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Summary

  • The drop in gold prices has puzzled gold investors.
  • Gold related companies' share prices have taken a hit as a result.
  • Some companies' stock may be undervalued in relation to their earnings.

US stocks retreated this week, as consumer confidence unexpectedly fell.

The S&P has had a pretty good year so far, climbing about 4% and quickly recovering from a large sell-off of small-cap and tech stocks. Concerns about Ukraine have started to abate as well, putting to rest geopolitical woes.

One indication of growing confidence is the price of gold, which had its worst week of the year. Gold prices had climbed about 8% through April. But growing stability in Europe decreased the allure of the safe haven asset.

For our screen today, we decided to look for undervalued stocks that were trading at steep discounts and had share prices of less than $5. Regardless of how we oriented the screen, we saw lots of companies involved in gold.

All three of the stocks on our list have experienced earnings growth that outpaced growth in the share price. Sometimes, earnings grow while a stock price declines. Since stocks mostly trade on earnings, this is called an EPS/Price mismatch.

Two of the three stocks in our screen work in gold, indicating that now could be a good time for investors looking to snap up some leverage on gold at a nice discount.

Do you think these companies are undervalued? Use the list below to begin your analysis, and let us know what you think in the comments.

1. Harmony Gold Mining Co. Ltd. (HMY, Kapitall snapshot): Engages in underground and surface gold mining operations in South Africa and Papua New Guinea. Market cap at $1.14B, most recent closing price at $2.61.

The EPS estimate for the company's current year increased from $0.16 to $0.18 over the last 30 days, an increase of 12.5%. This increase came during a time when the stock price changed by -8.9% (from $3.37 to $3.07 over the last 30 days).

2. IAMGOLD Corp. (IAG, Kapitall snapshot): Engages in the exploration, development, and production of mineral resource properties worldwide. Market cap at $1.14B, most recent closing price at $3.04.

The EPS estimate for the company's current year increased from $0.15 to $0.16 over the last 30 days, an increase of 6.67%. This increase came during a time when the stock price changed by -8.27% (from $3.75 to $3.44 over the last 30 days).

3. Teekay Tankers Ltd. (TNK, Kapitall snapshot): Engages in the ownership and operation of oil tankers. Market cap at $302.92M, most recent closing price at $3.62.

The EPS estimate for the company's current year increased from $0.16 to $0.17 over the last 30 days, an increase of 6.25%. This increase came during a time when the stock price changed by -8.09% (from $4.08 to $3.75 over the last 30 days).

Source: Deal Or No Deal: 3 Undervalued Stocks Under $5 With EPS Growth