4 Gold Stocks Trading Near A 52-Week Low

Includes: AU, GDX, GFI, GLD, HL, HMY
by: Plan B Economics

With gold closing on Friday at $1685/oz, it is up about 9.8% since its May 16 close of $1543/oz. Given that many gold miners are more-or-less a levered play on gold, one would reasonably expect that gold miners would outperform on the upside. As the graph below shows, since May 16, 2012, the Market Vectors Gold Miners ETF (NYSEARCA:GDX) has outperformed SPDR Gold Trust ETF (NYSEARCA:GLD) by a significant margin.

GLD Chart

GLD data by YCharts

However, despite the strong performance from the gold miners ETF, many gold mining companies have lagged the rally. I recently ran a screen to identify gold stocks that are trading within 10% or less of their 52-week lows. Here's what I identified:

Ticker Company Market Cap (in millions)
(NYSE:AU) AngloGold Ashanti Ltd. $12214.83
(AZK) Aurizon Mines Ltd. $670.79
(NYSE:GFI) Gold Fields Ltd. $8987.56
(NYSE:HMY) Harmony Gold Mining Co. Ltd. $3685.52

The graph below illustrates the one-year performance.

AU Chart

In addition to weak one-year performance, these stocks have lagged the recent rally in both gold and the broader gold mining index.

GLD Chart

GLD data by YCharts

So what's going on? First of all, AU, GFI and HMY are all South Africa-based mining companies. Given the growing tensions in that country, these stocks have taken a hit. AZK is a Canadian gold miner that has pointed to weaker production estimates and has provided disappointing earnings in the past.

However, for the investor with capital to risk, these stocks might be priced at a good entry point. (Note: this is not a solicitation to buy. Do your own due diligence and consult a financial advisor before investing.) Based on valuations (see table below), these companies may be cheap:

Ticker P/E Forward P/E P/S P/B P/Cash
AU 7.94 7.67 1.77 228 12.38
AZK 12.75 11.66 2.45 1.92 3.19
GFI 8.99 6.88 1.51 1.55 11.31
HMY 14.23 8.9 1.89 0.91 17.06

Are these companies worth the trouble? The table below suggests that these are all profitable companies.

Ticker Return on Assets Return on Equity Operating Margin
AU 16.18% 33.08% 34.22%
AZK 13.12% 16.52% 33.80%
GFI 9.39% 16.79% 25.90%
HMY 4.63% 6.00% 13.47%

In fact, the decent entry point seems to be coupled with a dividend that pays investors to wait out the troubles. For the gold bug looking to put some risk-capital to work, these names might warrant some deeper investigation.

Ticker Dividend Yield Payout Ratio
AU 1.93% 14.01%
AZK 0.00%
GFI 3.59% 7.27%
HMY 1.42% 18.56%

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

Additional disclosure: Data Source: Finviz. This is not advice. While the author makes every effort to provide high quality information, the information is not guaranteed to be accurate and should not be relied on. Investing involves risk and you could lose all your money. Consult a professional advisor before making any investing decisions.