Seeking Alpha
Profile| Send Message|
( followers)  

Since the beginning of September, the prices of gold stocks have been getting slammed. This article will examine five gold stocks to determine if they now offer investors good buying opportunities. Here is my analysis:

Goldcorp Inc. (NYSE:GG) Goldcorp has a market cap of $36.26 billion with a price to earnings ratio of 19.28. The stock has traded in a 52 week range between $39.04 and $56.31. The stock is currently trading around $47. The company reported second quarter revenues of $1.28 billion compared to revenues of $897 million in the second quarter of 2010. Second quarter net income was $472 million compared to net income of $877 million in the second quarter of 2010.

One of Goldcorp’s competitors is Anglo Gold Asanti Ltd. (NYSE:AU). AU shares are currently trading around $41 with a market cap of $15.99 billion and a price to earnings ratio of 15.99.

Goldcorp is one of the largest gold and silver mining companies in the world. The company has benefited from the recent high gold prices and in 2010 increased its operating income by 60%. Goldcorp has been a consistently profitable company that has had positive income in each of the last 10 years. The stock has performed well and is up by 86% over the last three years. The stock price is up by 8.45% over the last 52 weeks but down by 15% over the last month. I believe that the price of gold will remain high and that Goldcorp’s earnings will continue to be strong. The recent drop in the stock price could be an excellent buying opportunity for investors that believe the price of gold will remain high. I rate Goldcorp as a buy.

Gold Fields Ltd. (NYSE:GFI) Gold Fields has a market cap of $10.99 billion with a price to earnings ratio of 39.84. The stock has traded in a 52 week range between $13.62 and $18.70. The stock is currently trading around $15. The company reported net income of $7.7 million in the fiscal year ending on June 30, 2010 compared to net income of $252 million for the fiscal year ending on June 30, 2009.

One of Gold Fields competitors is Newmont Mining (NYSE:NEM). NEM is currently trading around $64 with a market cap of $31.66 billion and a price to earnings ratio of 14.3.

Gold Fields is a South African-based gold mining company. In spite of the increase in gold prices, this company’s earnings have been decreasing. Net income has decreased from $530 million in 2008 to $7.7 million in 2010. Large fund managers have taken notice of the company’s increasingly poor performance, and have become bearish on the stock. Despite the bad news, the company’s stock price is down by only 2.13% over the last 52 weeks. The company is currently trading with a 39.84 price to earnings ratio, which is high for a gold mining company. I would not recommend this stock at this time. I rate Gold Fields as a hold.

Iamgold Corporation (NYSE:IAG) Iamgold has a market cap of $7.32 billion with a price to earnings ratio of 8.85. The stock has traded in a 52 week range between $16.06 and $23.88. The stock is currently trading around $20. The company reported second quarter revenues of $334 million compared to revenues of $241 million in the second quarter of 2010. Second quarter net operating income was $71.9 million compared to net operating income of $38 million in the second quarter of 2010.

One of Iamgold’s competitors is Randgold Resources Ltd. (NASDAQ:GOLD). GOLD is currently trading around $99 with a market cap of $9.02 billion and a price to earnings ratio of 44.75.

Iamgold has increased its net operating income in each of the last three years. In 2010 net operating income increased by 131%. The company has been well managed, and in spite of a number of recent buys and sells, has an extremely strong balance sheet. Iamgold has around $1.1 billion in cash and no debt. The stock price is up by 7.6% over the last 52 weeks despite losing 16.6% over the last month. I believe that Iamgold will continue to have strong earnings and that the recent drop in the stock price offers investors a terrific buying opportunity. With an 8.85 price to earnings ratio the stock is cheap. I rate Iamgold as a buy.

Eldorado Gold Corporation Ltd (NYSE:EGO) Eldorado has a market cap of $9.08 billion with a price to earnings ratio of 40.37. The stock has traded in a 52 week range between $13.34 and $22.12. The stock is currently trading in the middle of its trading range at around $17. The company reported second quarter revenues of $243 million, compared to revenues of $221 million in the second quarter of 2010. Second quarter net income was $72.3 million compared to net income of $64.3 million in the second quarter of 2010.

One of Eldorado’s competitors is Anatolia Minerals Development Ltd. (OTCPK:ALIAF). ALIAF.PK is currently trading around $10 with a market cap of $2.8 billion and a negative price to earnings ratio.

Eldorado is a Canadian gold mining company that operates throughout the world. The company is well established, and has made a profit in each of the last five years. In 2010, the company benefited from the high price of gold and realized a 91.5% increased in its net income. The company increased year-over-year second quarter revenues by 9.9% and net income by 12.4%. In spite of the recent earnings increases, the stock has performed poorly. The stock price is down by 10.7% over the last 52 weeks and 29.2% over the last month. With a price to earnings ratio of 40.37 and a price to book ratio of 3.06, this stock is still expensive for a gold stock. I rate Eldorado as a hold.

U.S. Gold Corporation (NYSE:UXG) U.S. Gold has a market cap of $529.50 million, with a negative price to earnings ratio. The stock has traded in a 52 week range between $3.24 and $4.14. The stock is currently trading around $3.75. The company has not yet produced any revenues. The company had net income of $-33.09 million in 2010 and $-27.69 million in 2009.

U.S. Gold is purely an exploration company, which has not begun production, and has no revenue stream. The company does not plan to begin production until 2014. It is estimated that the company owns properties with probable gold reserves of 45 million ounces. The stock price is down by 25.98% over the last 52 weeks but up by 335% over the last three years. This stock might be of interest to day traders, but it is not a company that I would recommend investing in. I rate U.S. Gold as a sell.

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Source: 3 Gold Stocks That Could Make You Money, 2 That Won't