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Bull of the Day: B2Gold (BTG)

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Easily one of the biggest stories this year has been the sudden and shocking rise in the price of gold. The yellow metal, which was mired in sluggish trading for years, has surged by close to $300/oz. so far this year, putting gold within striking distance of $1,400/oz. once more. This represents a roughly 30% gain in the first six months of the year, a level that easily crushes the broad market’s 2.4% gain in the same time period.

And as impressive as gold’s surge has been, it has been even more astounding when you consider how gold mining stocks have performed in this environment. Companies here often trade as a leveraged play to the underlying metal since increases or decreases in the price of gold often flow almost directly to the bottom line, so a surging gold price has been incredibly beneficial.

Take B2Gold (BTG - Free Report) for example. This tiny, Vancouver-based gold miner has interests in a variety of mines on several continents, and its stock really struggled leading up to 2016’s surge. In fact, to kick off 2016, shares were testing $0.75/share before the sudden surge in gold sent this stock skyrocketing.

Shares of BTG are now testing $3.00/share and the company has added an outrageous 180% to start 2016. But even with this impressive jump, there is actually plenty of reason to think that more gains might be ahead for BTG.

Why BTG Could Still Go Higher

With the big gain in gold prices, analysts have been rapidly raising their estimates for BTG, believing that their earnings picture is looking more impressive now. The consensus estimate has doubled in the past two months for the current year, while we have seen great trends for the next year time period too. In fact, the most accurate estimate for next year looks for eight cents a share in earnings next year, quadruple the consensus estimate from just two months ago.

B2GOLD CORP Price and Consensus

B2GOLD CORP Price and Consensus | B2GOLD CORP Quote

Clearly, analysts are on the BTG bandwagon and are believers in surging gold prices driving the earnings story for this company. No wonder the stock has earned a Zacks Rank #1 (Strong Buy) and is currently rated in the top 5% of all stocks we cover.

But if that wasn’t enough, investors should also consider the growth metrics for BTG and how these crush the industry at large. BTG looks to post EPS growth of 800% compared to an industry average of a still robust 104%. Meanwhile, its projected sales growth is approaching 13% while its sales/assets ratio is below the industry average too.

With these metrics investors shouldn’t be surprised to note that BTG has earned an ‘A’ Growth grade, making this gold miner a great choice in this industry.

And best of all, even with this recent jump in shares, BTG stock hasn’t even eclipsed its 2013 high yet. While that obviously isn’t a reason to buy the stock on its own, it is encouraging that back in the last period of stable to higher gold prices, BTG was far higher, suggesting that if gold trends continue we could again touch those previous levels.

Bottom Line

While BTG has had a great start to the year, investors can still expect more gains for this small cap stock in the months ahead. The earnings picture is bright, the company has great growth prospects, and the outlook for gold prices is promising too.

So if you are thinking about diving into the gold mining market, definitely give this top ranked stock, which probably hasn’t been on your radar until now, a closer look.

And for more on gold investing, make sure to check out our recent podcast on the topic below:

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