Two Overlooked Gold Miners Worth Considering

Includes: EGO, GFI, IAG, KGC
by: Bret Jensen

Gold stocks have been on fire over the last month after underperforming the S&P for over a year. Miners like IAMGOLD Corp (NYSE:IAG) and Eldorado Gold (NYSE:EGO) have had 30% plus moves over the last 30 days and have crushed the overall market's rise (See chart). Given the latest moves by Helicopter Ben, the sector may be in the early innings of a substantial move up. Here are two cheap gold miners that have had some operational issues at their properties and have not participated nearly to the extent as those mentioned. They might be good plays for a "catch up" move.

"Kinross Gold Corporation (NYSE:KGC) engages in mining and processing gold ores. It is also involved in the exploration and acquisition of gold bearing properties. The company's gold production and exploration activities are carried out principally in Canada, the United States, the Russian Federation, Brazil, Ecuador, Chile, Ghana, and Mauritania." (Business description from Yahoo Finance)

4 reasons KGC has upside from just over $10 a share:

  1. The stock is cheap at just 93% of book value and 10 times operating cash flow.
  2. Over the past five years, the company has averaged better than 30% increases in annual revenue growth. Analysts expect double digit sales growth in FY2013 and about 9% this year.
  3. KGC is selling at just over 10 times forward earnings.
  4. The stock is selling at the bottom of its five year valuation range based on P/E, P/B and P/S.

"Gold Fields Limited (NYSE:GFI) engages in the acquisition, exploration, development, and production of gold properties. It holds interests in eight operating mines in South Africa, Peru, Ghana, and Australia." (Business description from Yahoo Finance)

4 reasons GFI is a bargain at under $13 a share:

  • The stock is cheap at just five times operating cash flow and 7 times forward earnings. The company has almost doubled operating cash flow over the past three years.
  • After falling for months, consensus earnings estimates for both FY2012 and FY2013 have ticked up over the past week. The stock also provides a 3% yield.
  • The stock is selling at the very bottom of its five year valuation range based on P/E, P/CF and P/S.
  • GFI has strong technical support at the $12 level (See Chart).

Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in GFI over the next 72 hours. 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.