Are These Gold Stocks On Your Watch List In December?
Gold has had a great year so far owing to the uncertainty in the global markets. The U.S-China trade war and the associated chaos forced many investors to run for safer assets like gold stocks. Gold prices rallied this week as well due to a lack of direction regarding trade tariffs.
But Friday saw a rally in the general market as the November Jobs Report came in strong. On the surface, this may appear as great news especially since it triggered an early move in SPY to levels just shy of all-time highs in the morning.
But let’s take a closer look at these figures. This year, data sets may be a bit skewed thanks to one-off events. Tariffs may be considered one of these since a trade deal could decrease or eliminate certain tariffs in the future.
The “blowout” November numbers came in much higher than expected. Nonfarm payroll numbers came in at 266,000 compared to 187,000 expected. Here’s where there may be some “one-time” figures to consider.
Gold Stocks To Watch After November Jobs Report
The end of General Motors’ (GM Stock Report) strike drove a gain of 54,000 in manufacturing jobs in the month. It would be interesting to see what other industries or companies not in the spotlight also “added jobs” that may have been on pause during previous months. Needless to say, these figures helped boost the number considerably. Even discounting the GM number, nonfarm figures still outshined expectations.
Despite these favorable figures, we’ll still need to monitor the trade war closely as it continues to impact the market dramatically. President Trump has indicated that if the US doesn’t get enforcement on certain terms, it won’t go through with a deal with China.
That hasn’t received as much attention today as Jobs numbers but definitely worth keeping in the back of your mind. With that, we still monitor gold stocks to watch as market uncertainty persists.
Gold Stocks To Watch #1: Hecla Mining Company
The first company on this list of gold stocks to watch, Hecla Mining Company (HL Stock Report), delivered impressive gains during the second half of 2019. HL stock gained as much as 115%. In early November, the company announced its third-quarter financial results. It managed to reduce its loss per share from $.04 a year ago to $.02 in the latest quarter. Revenues stood at $161.53 million, which was behind consensus estimates by as much as 12.98%. The recent surge in gold makes it worthwhile to have a look at Hecla stock.
Thanks to its performance, analysts have made strong cases in favor of the gold stock. B. Riley raised its price target from $1.80 to $2.75. Furthermore, BMO Capital lifted Hecla to Market Perform from Underperform and raised its price target to $2.20. Previously, BMO issued a price target of $1.60.
However, investors should note the pullback in shares on Friday. The positive jobs report lends itself to speculation on the Fed raising rates. That’s based on the view that the economy is strengthening. Though the Fed decreased rates several times this year, some assume that may change in 2020. That’s still yet to be seen.
Gold Stocks To Watch #2: Kinross Gold
The other interesting gold stock to consider, Kinross Gold Corporation (KGC Stock Report), made a major announcement on Thursday. It could have an effect on KGC stock. Kinross announced that it has decided to sell its stock in Lundin Gold to a consortium of buyers. The company holds a total of 20.656,250 Lundin shares and is going to receive around CAD$150 million after the sale.
This syndicate includes the likes of Newcrest Mining and Lundin Family Trust. The sale equates to just over 9% of the issued and outstanding shares of Lundin Gold based on the latest public info. This came after the company sold its royalty portfolio to Maverix Metals for $74 million. The angle Kinross took was based on streamlining its balance sheet and strengthen it for growth. KGC fell to the mercy of the market as well on Friday.
However, in spite of this, it is one of the gold stocks attracting analyst attention. Raymond James rates Kinross at Outperform with a $6 price target. RBC Capital, on the other hand, gave a target of $5 with a rating of Sector Perform.
Gold Stocks To Watch #3: Yamana Gold
The other gold stock that has enjoyed an impressive rally recently is that of Yamana Gold Inc. (AUY Stock Report). Over the course of the past three weeks, the gold stock has gained as much as 25%. One of the important triggers was an announcement made by Yamana Gold towards the end of last month.
The company doubled its dividend payout to 4 cents a share in Q3 2019. Yamana also announced that it’s considering raising dividends by 50% to 100%. That naturally resulted in a rally in the stock. Newly identified mineralization and potential for extended mine life in places like its El Penon project have added to the interest gained from investors.
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However, AUY stock took a tumble on Friday. Just as with the other gold stocks on this list, Yamana dipped following news of strong November nonfarm payroll figures. Regardless, is this one of the gold stocks to buy before 2020 or avoid entirely?
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