BVN - 3 Gold Mining Stocks to Buy on a Weakening Dollar

Gold has always been considered a safe haven to store value when financial markets are volatile.  Besides physical gold, many investors prefer to gain exposure to the metal by owning gold mining stocks. 2020 has been a year in which markets have remained highly volatile. Hence, gold mining stocks have been in demand. With a total return of more than 34% over the past year, the VanEck Vectors Gold Miners ETF (GDX) has outperformed the S&P 500 index.

In addition, gold prices rose above $1900/oz for the first time in the past six weeks, alongside a steep fall in the U.S. dollar; these are favorable conditions for gold mining stocks. Moreover, the Federal Reserve’s dovish stance and the approval of a $900 billion stimulus package by the U.S. Congress is expected to spur another rally in the precious metal prices.

Analysts expect the momentum to continue as we move into 2021. Yamana Gold Inc. (AUY), Alamos Gold Inc. (AGI), and Buenaventura Mining Company Inc. (BVN) are three gold miners whose stocks are likely to benefit the most.

Yamana Gold Inc. (AUY)

AUY is a Canadian precious metal miner of gold and silver. Argentina’s Cerro Moro mine, Brazil’s Jacobina mine, the Canadian Malartic mine, Chile’s El Penon, and Minera Florida mines are the producing mines for AUY.

AUY has completed the integration of the Agua Rica project with the Minera Alumbrera plant. The integrated project will now be known as the MARA Project. This new project delivers enhanced efficiencies and is one of the least capital intense mining projects globally as measured by pounds of copper produced and in-situ copper mineral reserves.

During the third quarter ended September 30, 2020, AUY’s revenue climbed 22.8% year-over-year to $439.4 million. EPS for the quarter fell to $0.06 from $0.21 posted in the same period last year. AUY’s revenue per ounce of gold increased 29.7% year-over-year to $1910. And during the quarter, the company also posted operating cash flow of $215 million, the highest level since 2015. Meanwhile, AUY’s net debt declined 19.4% year-over-year to $619.1 million.

Analysts expect AUY’s EPS to increase 266.7% year-over-year to $0.11 for the quarter ended December 31, 2020. On a year-to-date basis, AUY surged 44.3% to end yesterday's trading session at $5.70. Over the past six months, the stock climbed 13.3%.

How does AUY stack up for the POWR Ratings?

B for Trade Grade

B for Peer Grade

B for Overall POWR Rating.

It is ranked #2 of 30 stocks in the Miners - Gold industry.

Alamos Gold Inc. (AGI)

AGI is primarily involved in acquiring, exploring, and extracting gold deposits in North America. Besides gold, AGI also mines silver and other precious metals. Young-Davidson mine, located in Ontario, is the company’s flagship project, which includes adjoining mineral leases spanning across 11,000 acres. AGI also has projects in Turkey, Mexico, Canada, and the United States.

AGI has completed an agreement to acquire Trillium Mining Corp for C$25 million cash. Trillium holds a large land package spanning 5,418 hectares (“ha”) directly adjacent to the Island Gold Deposit within the Michipicoten Greenstone Belt. The acquisition has significantly expanded its land package around the Island Gold mine to 14,929 ha, representing a 57% increase This land includes significant exploration potential close to existing high-grade mineral resources.

During the third quarter ended September 30, 2020, AGI’s gold production returned to budgeted levels after the temporary suspension of operations at Island Gold and Mulatos in the second quarter due to the pandemic. The company produced 117,100 ounces of gold during the third quarter, representing 49% growth over the previous quarter. AGI’s revenue for the third quarter climbed 26.3% year-over-year to $218.4 million, while EPS rose to $0.17 from $0.05 posted in the same period last year. The company also ended the third quarter with record free cash flow of $76 million.

Analysts expect AGI’s EPS to increase 137.5% year-over-year to $0.19 for the quarter ended December 31, 2020. The stock ended yesterday’s trading session at $9.19, gaining 52.7% on a year-to-date basis. AGI has risen 15% over the past six months.

AGI’s POWR Ratings reflect a promising outlook. It has an overall rating of “Buy” with an “A” for Peer Grade, and a “B” for Trade Grade. In the Miners - Gold industry, it is ranked #3.

Buenaventura Mining Company Inc. (BVN)

BVN is a leading precious metal explorer and miner of gold, silver, lead, zinc, and copper metals in countries including Peru, the United States, Europe, and Asia.

Uchucchacua, Orcopampa, Julcani, and Tambomayo are the company’s four mining units in Peru. BVN also produces manganese sulphate, which is used in the agriculture and mining industries. The company also provides electrical transmission services as well as energy generation services through hydroelectric power plants. BVN has six different mining properties around the globe, which bring in an estimated 945,000 ounces of gold every year.

BVN’s revenue during the third quarter ended September 30, 2020 fell 0.9% year-over-year to $228.2 million. However, EPS for the quarter surged over 400% over the previous year to $0.10. Despite the impact of COVID-19 on BVN’s operations during the quarter, its EBITDA from direct operations climbed 158.4% quarter-over-quarter to $68.5.4.

Analysts expect revenue for the year ended December 31, 2021 to be $246.3 million, representing a 115.1% gain on a year-over-year basis. EPS is likely to grow at the rate of 18.43% per annum over the next five years. On a year-to-date basis, BVN climbed 17.4% to end yesterday’s trading session at $12.48. Over the past six months, the stock surged 44.3%.

BVN is rated “Buy” in our POWR Ratings system. It also has an “A” for Trade Grade and Peer Grade. It is ranked #4 of 30 stocks in the Miners - Gold industry.

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AUY shares were trading at $5.52 per share on Tuesday afternoon, down $0.18 (-3.16%). Year-to-date, AUY has gained 41.24%, versus a 15.83% rise in the benchmark S&P 500 index during the same period.

About the Author: Namrata Sen Chanda

Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education.

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