Kinross Gold Corp is going through such a pullback at the moment, presenting investors with a great buying opportunity, in our humble opinion.
Fundamentally, Kinross is a good gold stock that we like very much. It was one of our favorites along with Bema Gold. When Kinross bought Bema, it made us like Kinross even more. Kinross has projects in Canada, USA, Brazil, Chile and Russia.
Technically speaking, this stock has a RSI of 33.21 that has turned up slightly from the bottom of the RSI range, a bullish sign. Also the MACD and STO are very low indicating a buy signal today.
From simply looking at the chart, one can see the previous pullbacks, circled in red, and it is our belief that this is another one of these pullbacks that the stock should be acquired on.
On the most recent pullback, KGC fell to around $10.80 before rising to over $14.50 in a few months, a rise of over 34%. On the one before that, the stock fell to $8.92 but then increased 72% to $15.39. The pullback preceding that saw the stock price falling to $8.77 and then raising to $13.12 an increase of nearly 50%.
Applying these percentage rises to today’s stock price, the most conservative estimate for a rise is 34%, which would see Kinross stock trading for $15.66, and the most cavalier would show KGC trading for $20.10. An average of all the previous percentage gains would see and increase of over 52%, which would send the stock price of Kinross Gold Corp to $17.77
Looking at the financial situation at Kinross Gold, we take a look at their 2007 first quarter report, which was glowing. The revenue increased by 24%, compared with Q1 2006, as Kinross pulled in $245.7 million, selling its gold for an average of $650 per ounce for an average cost of sale of $328. The average cost of sale has only risen $1 per ounce since the same period last year, a very good sign purely on the basis that inflation alone should have carried the costs up more than that.
Kinross made net earnings of $68.5 million or roughly 16 cents per share. This is a dramatic increase from the same period last year where Kinross earned 3 cents a share on earnings of $8.9 million. However, the most significant news in the report was that Kinross completed the acquisition of Bema Gold Corp on February 27th 2007. This moved Kinross up the gold producer ranks, making them a much larger player in the sector. The added size should help improve various economies of scale but perhaps more importantly as Kinross is now a bigger company it may be able to attract more fund buying of the stock, which should be beneficial to the price.
Regardless of the short-term movements in stock price, in the long term we see Kinross going much higher as gold prices climb into four figures and we see this as a good point to add to existing stock holdings or acquire a stock position if one does not already have one established.
Kinross shares trade on the NYSE under the symbol KGC and are currently trading at a price of around $11.66. KGC has a market cap of $6.9 billion; gold prices, at the moment, are $649.70