Alamos Gold suffered from minor dips in valuation recently, largely thanks to investors who got cold feet and decided to sell their shares, causing the company’s stock to become oversold throughout the market. Alamos Gold remains ambitious and has serious growth potential, however, and those investors who abandoned the company early will likely be sorry.
Investors should dig in
Those investors worried about Alamos Gold (NASDAQ: AGI) recent mild loss of valuation shouldn’t panic, but rather dig in; the company’s stocks are hugely oversold right now, and those who hold onto their shares won’t be regretting it in the near future. Alamos Gold has taken a series of steps lately that should reassure investors that their money’s in good hands, namely by acquiring another company and ensuring that production remains constant and on-track to meet expectations.
Alamos Gold saw shares dip by nearly 2 percent within recent days, briefly dropping to as low as $4.91 per share. The company may be down, but it’s certainly not out; if anything, the market is greatly undervaluing its stock. Alamos Gold recently launched a successful acquisition of Richmont Mines, for instance, a move that seriously diversifies its assets in a way that should be pleasing to investors.
The acquisition helped alleviate some fears concerning profitability and cash on hand that investors were mulling over, and will help Alamos Gold power through the recent, minor downturn in its stock pricing. High-grade underground gold mines the likes of which Alamos Gold got its hands on in the acquisition are part of the strategy sure to boost the company’s future prospects, however; a commitment to ensure its currently-operating mines remain on track with their production expectations will be equally important for Alamos’ long-term success.
Being able to enhance its production figures while keeping overhead cost low in existing mines, for instance, will be necessary if Alamos Gold wants to ensure investors it will be profitable for years to come. Greater cash flow from the company derived from its recent acquisition will help fuel future purchases, too, and can help alleviate investor concerns that Alamos Gold doesn’t have enough money to properly invest in its longevity.
Don’t be spooked by market panic
Investors shouldn’t be spooked; the recent dip in valuation for Alamos Gold was nothing more than the market panicking and overselling. A thoughtful analysis of the company shows that its shares are likely to recover soon, and indeed it’s already climbed back up from the low $4.91 it was trading at during the lowest point of its recent valuation dip.
While the Canadian-based Alamos Gold has posted a net income of $17.90 million recently, it remains superior to its leading competitors in many ways, and is a healthier stock for gold investors than many others which will struggle in forthcoming years. A diversified mining portfolio should help convince uneasy investors that the company is taking steps to turn its current losses into profits, and an understanding of the broader gold industry helps show that many of Alamos Gold’s smaller competitors are ill-suited to ousting the company anytime soon.
With Alamos Gold’s Q32017 operations having significantly outperformed Q2 production figures, it stands to reason the company is seriously trying to retrofit its operations currently; it’s Q3 production exceeded Q2 production by some 100,000 ounces, for instance. Production figures like that, which keep beating expectations, will prove invaluable to the company’s wellbeing over time, particularly as its new mines start churning out valuable materials.
With initial production finally getting started at other Alamos Gold sites, the company will likely be buoying its production figures even further sooner. Many of its current operations are on schedule and ahead of budget, according to its third quarter 2017 production report, and there are few reasons to be convinced Alamos Gold’s executives are dropping the ball when it comes to investing in the company’s prolonged future.
Don’t buy into the broad panic that surrounded Alamos Gold and cost the company a little bit of its market valuation; overall, Alamos Gold remains healthy, and its recent acquisition shows that the company is forward thinking and committed to upping its production figures. Alamos Gold could be one of the biggest surprises to the market in 2018 if it keeps getting underappreciated, and investors should understand that if the company keeps beating its production figures, its bound for success regardless of what a few panicky shareholders decide to do.