Gold Stocks Are Surging In August
Once again, gold stocks are on the move in August. This continues the surge we saw in July with the price of gold reaching new all-time highs multiple days in a row. That was also the case on August 3rd when the precious metal broke further above the mental $2,000 threshold. During the very early morning session, gold prices reached a high of $2,009.50 and managed to hold above $1,990 for most of the session.
Questions are starting to arise wondering if this is “a top” for gold prices. Most of the projections from earlier this year have been reached, which exception of a few hight targets for extremely bullish analysts. Additionally, we’re also seeing other analysts trying to help investors find less expensive way to gain exposure to gold.
Are Gold Stocks Worth It Right Now?
“We’ve thought about adding to more of our positions that we’ve already got in gold in our model portfolio that we do run for Piper Sandler, and right now, trend is still higher,” said Craig Johnson, senior technical research analyst at Piper Sandler. “It’s gotten a little bit overbought. We’re waiting for it to come back a little bit and then we’ll probably add to some of our positions in the gold names just to create some further diversification into the portfolio.”
- Gold Prices Surged Past $2,000; Another All-Time High Reached In 2020
- Are Gold Stocks Still A Buy Right Now?
The analyst went on to discuss the opportunities with individual gold stocks. Wheaton Precious Metals (WPM Stock Report), a gold streaming company, was one of these that the firm was bullish on. “This is a stock that still remains in a very nice uptrend off of those March lows like a lot of other stocks, doesn’t necessarily look like it’s about to break down, and from our perspective, the relative strength has been nicely improving.”
So are gold stocks your best bet right now? Here’s a list of a few turning heads but will you rate them a Buy or avoid them altogether?
Top Gold Stocks To Buy [or avoid]: Hecla Mining Co.
Shares of Hecla Mining Co. (HL Stock Report) reached a new 52-week high last week. HL stock tapped $5.68, which marked more than just a new yearly level. Hecla stock hasn’t traded this high since 2017.
Analysts at RBC recently upgraded Hecla to Sector Perform and riased the price target to $4.50. B.Riley had a similar response with an upgrade to Buy from Neutral. However, it left its price target set at $4.50 for the time being. Earlier this month the company reported preliminary production results and its cash position at the end of the second quarter as well as a new investment by Investissement Quebec.
Silver production came in at 3.4 million ounces, and gold production of 59,982 ounces. Its cash position was approximately $76 million. Furthermore, in the third quarter, to enable open market purchasing of some existing 7.25% coupon bonds and fund Casa Berardi’s capital expenditures, Hecla issued C$50 million (US$36.8 million) of senior unsecured notes to Investissement Quebec with a five-year maturity yielding 5.74%.
Something to note this week is earnings. Hecla reports on August 6th and plans to host a conference call mid-morning.
Top Gold Stocks To Buy [or avoid]: Freeport-McMoRan Inc.
Freeport McMoRan (FCX Stock Report) is another one of the gold stocks to watch right now. In April 2020, Freeport announced revised operating plans in response to the global COVID-19 pandemic. The company is executing the revised operating plans in an effective manner while prioritizing the health and well-being of its employees, their families, and communities.
Freeport’s come out with several updates to note. Late last month the company reported an earnings beat on EPS. Unfortunately it missed on sales figures. However, in his commmentary, CEO Richard Adkerson explained that he believed the biggest risk at its Grasberg Mine Expansion are behind the company. He expects a strong financial position in 2021. Based on that, Adkerson says he expects to reinstate the company’s dividend. Further to these results, FCX stock saw several analysts jockeying their outlook on the company.
Jefferies increased its price target to $19 while keeping a Buy rating on the stock. RBC Capital also lifted its target. Previously they had Freeport at $11, which was then boosted to $14. BMO Capital followed suit maintaining an Outperform rating on the stock and lifting its price target to $17. At the end of the week last week, Deutsche Bank became the latest firm to fall in line. The bank lifted its target on Freeport to $16 from $13.50. It maintains a Buy rating on the gold stock. Considering the latest, is FCX one of the gold stocks to buy or avoid in August?
Top Gold Stocks To Buy [or avoid]: Kinross Gold Corp.
This continues to be one of the hot gold stocks to watch. Unlike many of the other names in the sector, Kinross Gold Corp. (KGC Stock Report) managed to reach a new 52-week high on Monday. The gold stock hit $9.46 during the first hour of trading on August 3rd marking the second consecutive session that Kinross Gold stock made a new milestone high. In fact, if you look back at the history of KGC, you’ll see it hasn’t traded this high since 2013.
Kinross also reported earnings recently. The company recorded an EPS of $0.15 on sales of $1.01 billion for the second quarter. This exceeded the street on EPS and was in line with revenue expectations.
J. Paul Rollinson, President, and CEO made the following comments in relation to 2020 second-quarter results, “Kinross had a strong second quarter, as we generated robust free cash flow, more than doubled earnings year-over-year, and continued to strengthen our investment-grade balance sheet. Our margins increased 53% year-over-year, well above the 31% increase in the average realized gold price. Our portfolio of mines performed well and continued production during the quarter, with our three largest producing mines — Paracatu, Kupol and Tasiast — delivering the lowest costs.”
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