Even though gold has had a stellar year, not all gold stocks are created equally. Below we discuss five gold stocks that cover the spectrum of success—some are doing well, some are not. As usual, please consider this as a starting point for your own research.
Novagold Resources, Inc. (NYSEMKT:NG): Shares were recently trading at $9.44 giving it a market capitalization of $2.26 billion. The company has reported a $0.58 per share loss for the past year and pays no dividend. Shares are trading a little below the midpoint of the 52-week trading range of $5.93 to $16.90.
NovaGold is a gold company that does not seem to have the Midas touch. With gold prices up 26% over the past year, it seems unlikely that a company that deals with gold would be having trouble. NovaGold is proving that in spades. The company has experienced a year over year quarterly revenue growth decrease of 75.7%. Over that same time frame, it has reported net income of negative $133.98 million.
Compare those numbers with Barrick Gold (NYSE:ABX). Barrick saw quarterly revenue grow 44.4% over the past year and has posted $4.14 billion of net income in the same time frame. With all of the success throughout the gold industry, there is absolutely no reason to make such a speculative investment. Rate NovaGold a sell.
Jaguar Mining, Inc. (JAG): Jaguar’s shares are trading at $6, right at the midpoint of its 52-week trading range of $4.03 to $7.90. At this price, the company has a market capitalization of $502.86 million. The company has reported a $0.20 per share loss over the last twelve months. Jaguar Mining does not currently pay a dividend.
Jaguar is in better shape than NovaGold, but it also hasn’t been able to report positive earnings over the past year. It has experienced nice year over year quarterly revenue growth of 64.3%. It has had a little trouble with its margins. Gross margins over the past year have been 33.81%, but the operating margin has been negative 0.43%.
As mentioned above, Barrick Gold has lower quarterly revenue growth, but it has more impressive margins, with a gross margin of 60.11% and an operating margin of 46.20% over the past year. With a competitor like this available, why take a chance. Avoid this stock.
Iamgold Corporation (NYSE:IAG): At the time of this writing, shares were trading for $23--right below the high end of the company’s 52-week trading range of $16.06 to $23.88. This price gives the company a market capitalization of $8.63 billion. The company has reported earnings per share of $2.20 over the last four quarters. With a current dividend of $0.10, the company’s shares are yielding 0.50% for investors.
Iamgold has results along the lines of those of Barrick. With a gross margin of 51.76% and an operating margin of 35.19%, Iamgold is hitting on all cylinders. Iamgold also posted year over year quarterly revenue growth of a whopping 74.5%.
That revenue growth amount is significantly higher than the rise in the price of gold, so the company has been performing well. Other than slightly better margins, Barrick pays a little higher dividend (1% vs. 0.5%). Iamgold is a buy.
Golden Star Resources (NYSEMKT:GSS): Shares recently traded slightly above $2, near the low end of its 52-week trading range of $1.55 to $6.01. This share price gives it a market capitalization of $574.11 million. The company has reported earnings per share of $0.03 and doesn’t pay a dividend.
Golden Star has been able to maintain positive margins over the past twelve months, although it does have a higher operating margin (9.19%), than gross margin (5.26%), which is somewhat upside down. It has, however, seen a reduction in quarterly revenue over the past year.
Compared to competitors such as Barrick and Iamgold (both of which have impressive margins and revenue growth as discussed above), Golden Star comes up bit short. With those margins and no dividend, putting your money into the competition would make for a wise decision.
Gold Fields, Ltd. (NYSE:GFI): Shares were recently trading around $17, which is at the upper end of their 52-week trading range of $13.62 to $18.70. At this share price, the company’s market capitalization is $12.78 billion. Gold Fields has reported earnings of $0.39 per share over the past year. The current dividend of $0.28 per share provides investor with a yield of 1.60%.
While Gold Fields has a quarterly revenue growth rate of 8.8%, it has a stellar gross margin of 72.48%. Its operating margin is smaller than other companies with high gross margins (24.20% compared with Iamgold’s margins of 51.76% and 35.19% and Barrick’s of 62.04% and 46.69%, respectively). That implies that expenses are too high for this company.
Combine the high expenses and the low growth rate, and you have a company that has been unable to achieve its total potential. While there are some good parts to this story, wait for the plot to develop more before you invest. This stock is a hold.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.