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Why Amerigo Resources is the Best Mining Stock Right Now
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Amerigo Resources Ltd. (ARREF - Free Report) has been firing on all cylinders of late. The stock has garnered much interest given its 5.4% gain in stock price, in contrast to the 9.3% drop suffered by the sub industry this month so far.
Vancouver, Canada-based Amerigo Resources produces copper concentrate at the fully-owned MVC operation in Chile by processing fresh and historic tailings from Codelco’s El Teniente mine, the world’s largest underground copper mine.
What Makes the Stock an Attractive Pick?
Better-than-expected Q4 Results
In the fourth quarter of fiscal 2016, Amerigo Resources reported earnings per share of 2 cents per share, in contrast to the Zacks Consensus Estimate of a loss per share of 2 cents. Revenues came in at $29.5 million, ahead of the Zacks Consensus Estimate of $22 million. Higher-than-estimated copper price realizations and improved operating costs led to the outperformance.
Notably, copper production in full-year 2016 was a record 56.8 million pounds, 52% higher year over year.
Long-Term Growth Prospects
Amerigo Resources’ MVC operation in Chile is projected to produce 60.0 to 65.0 million pounds of copper at annual cash cost of $1.60 to $1.75 per pound in 2017. Moreover, MVC expects to produce 1.5 million pounds of molybdenum.
Following the U.S. Presidential election, copper saw a strong rally on the promises of significant U.S. infrastructure spending. The increase in copper price and good production from the high-grade historic Cauquenes deposit will translate into positive earnings performance for Amerigo. The company also remains focused on reducing costs and improving liquidity.
MVC’s life has been extended to 2037 with investment into the development of the higher grade Cauquenes tailings deposit. The company is planning to move forward with the phase 2 expansion of the Cauquenes Tailings Project. The project has an estimated cost of $30 million and is expected to increase production to 87 million pounds of copper per year, at an estimated cash cost of $1.40 per pound.
Further, the long-term fundamentals of copper remain positive, supported by its significant role in the global economy and a challenging long-term supply environment attributable to difficulty in replacing output of existing large mines with new production sources.
Positive Earnings Surprise History
Amerigo Resources has a positive earnings surprise history, with an average of 12.50% in the trailing four quarters.
Estimates Northbound
The company’s estimates for the first quarter and fiscal 2017, have moved north in the past 30 days, reflecting the positive outlook of analysts on the stock. For the first quarter, estimates have moved up 100% to the current level of 2 cents per share in the past 30 days. For fiscal 2017, the Zacks Consensus Estimate has moved up 80% to 9 cents per share.
Healthy Growth Expectations
The Zacks Consensus Estimate for the first quarter of fiscal 2017 is pegged at 2 cents, a marked improvement from the loss per share of 3 cents in the prior-year quarter. The Zacks Consensus Estimate for fiscal 2017 is pegged at 9 cents per share, an improvement from the loss per share of 4 cents in fiscal 2016.
Solid Zacks Rank
Amerigo Resources boasts a Zacks Rank #1 (Strong Buy) with a VGM score of “A”. Here V stands for Value, G for Growth and M for Momentum. Amerigo Resources’ score is a weighted combination of these three scores (Value – B, Growth – A, Momentum – B). Such a score allows you to eliminate the negative aspects of stocks and select winners.
Significant Price Rally
The company has emerged as a solid performer on the bourse recently, rallying a whopping 354.6% in the past one year. The gain is significantly higher than the Zacks classified Mining - Non Ferrous sub industry average of 22.5%.
As evident from the above chart, Amerigo Resources has also outperformed the other players in the Mining-Non ferrous space.
KAZ Minerals plc and Coeur Mining, Inc. (CDE - Free Report) both carry a Zacks Rank #2 (Buy) and have gained 175% and 48.1%, respectively in the past one year.
On the contrary, Arconic Inc. and Peninsula Energy Limited, both Zacks Rank #2 stocks have declined 8.6% and 17.2%, respectively in the same time frame.
Cheap Valuation
Amerigo Resources’ P/E (F1) ratio stands at 5.56, which is much lower than the industry average of 15.79, indicating that the stock is undervalued despite the recent strong price appreciation.
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Why Amerigo Resources is the Best Mining Stock Right Now
Amerigo Resources Ltd. (ARREF - Free Report) has been firing on all cylinders of late. The stock has garnered much interest given its 5.4% gain in stock price, in contrast to the 9.3% drop suffered by the sub industry this month so far.
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Vancouver, Canada-based Amerigo Resources produces copper concentrate at the fully-owned MVC operation in Chile by processing fresh and historic tailings from Codelco’s El Teniente mine, the world’s largest underground copper mine.
What Makes the Stock an Attractive Pick?
Better-than-expected Q4 Results
In the fourth quarter of fiscal 2016, Amerigo Resources reported earnings per share of 2 cents per share, in contrast to the Zacks Consensus Estimate of a loss per share of 2 cents. Revenues came in at $29.5 million, ahead of the Zacks Consensus Estimate of $22 million. Higher-than-estimated copper price realizations and improved operating costs led to the outperformance.
Notably, copper production in full-year 2016 was a record 56.8 million pounds, 52% higher year over year.
Long-Term Growth Prospects
Amerigo Resources’ MVC operation in Chile is projected to produce 60.0 to 65.0 million pounds of copper at annual cash cost of $1.60 to $1.75 per pound in 2017. Moreover, MVC expects to produce 1.5 million pounds of molybdenum.
Following the U.S. Presidential election, copper saw a strong rally on the promises of significant U.S. infrastructure spending. The increase in copper price and good production from the high-grade historic Cauquenes deposit will translate into positive earnings performance for Amerigo. The company also remains focused on reducing costs and improving liquidity.
MVC’s life has been extended to 2037 with investment into the development of the higher grade Cauquenes tailings deposit. The company is planning to move forward with the phase 2 expansion of the Cauquenes Tailings Project. The project has an estimated cost of $30 million and is expected to increase production to 87 million pounds of copper per year, at an estimated cash cost of $1.40 per pound.
Further, the long-term fundamentals of copper remain positive, supported by its significant role in the global economy and a challenging long-term supply environment attributable to difficulty in replacing output of existing large mines with new production sources.
Positive Earnings Surprise History
Amerigo Resources has a positive earnings surprise history, with an average of 12.50% in the trailing four quarters.
Estimates Northbound
The company’s estimates for the first quarter and fiscal 2017, have moved north in the past 30 days, reflecting the positive outlook of analysts on the stock. For the first quarter, estimates have moved up 100% to the current level of 2 cents per share in the past 30 days. For fiscal 2017, the Zacks Consensus Estimate has moved up 80% to 9 cents per share.
Healthy Growth Expectations
The Zacks Consensus Estimate for the first quarter of fiscal 2017 is pegged at 2 cents, a marked improvement from the loss per share of 3 cents in the prior-year quarter. The Zacks Consensus Estimate for fiscal 2017 is pegged at 9 cents per share, an improvement from the loss per share of 4 cents in fiscal 2016.
Solid Zacks Rank
Amerigo Resources boasts a Zacks Rank #1 (Strong Buy) with a VGM score of “A”. Here V stands for Value, G for Growth and M for Momentum. Amerigo Resources’ score is a weighted combination of these three scores (Value – B, Growth – A, Momentum – B). Such a score allows you to eliminate the negative aspects of stocks and select winners.
Significant Price Rally
The company has emerged as a solid performer on the bourse recently, rallying a whopping 354.6% in the past one year. The gain is significantly higher than the Zacks classified Mining - Non Ferrous sub industry average of 22.5%.
As evident from the above chart, Amerigo Resources has also outperformed the other players in the Mining-Non ferrous space.
Lundin Mining Corporation (LUNMF - Free Report) also sports a Zacks Rank #1 and has surged 72.7% in the past one year. You can see the complete list of today’s Zacks #1 Rank stocks here.
KAZ Minerals plc and Coeur Mining, Inc. (CDE - Free Report) both carry a Zacks Rank #2 (Buy) and have gained 175% and 48.1%, respectively in the past one year.
On the contrary, Arconic Inc. and Peninsula Energy Limited, both Zacks Rank #2 stocks have declined 8.6% and 17.2%, respectively in the same time frame.
Cheap Valuation
Amerigo Resources’ P/E (F1) ratio stands at 5.56, which is much lower than the industry average of 15.79, indicating that the stock is undervalued despite the recent strong price appreciation.
More Stock News: 8 Companies Verge on Apple-Like Run
Did you miss Apple's 9X stock explosion after they launched their iPhone in 2007? Now 2017 looks to be a pivotal year to get in on another emerging technology expected to rock the market. Demand could soar from almost nothing to $42 billion by 2025. Reports suggest it could save 10 million lives per decade which could in turn save $200 billion in U.S. healthcare costs.
A bonus Zacks Special Report names this breakthrough and the 8 best stocks to exploit it. Like Apple in 2007, these companies are already strong and coiling for potential mega-gains. Click to see them right now >>