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Bull of the Day: AngloGold Ashanti (AU)

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It has been a historic start to the year for commodities, in part thanks to the bull run in the price of gold. In fact, gold ETFs like (GLD - Free Report) have gained more than 25% in the year-to-date time frame, underscoring how impressive gold bullion has been in recent trading. And given that part of the reason for this surge is the negative interest rate environment, some investors believe this story still has a bit of running room.

This type of situation makes for incredible trading in the gold mining world, and no more so than with AngloGold Ashanti (AU - Free Report) . This gold mining stock has surged nearly 200% YTD, making it a top performer in the precious metal mining space this year. But with such amazing gains, investors have to be wondering, can this intense pace can continue?

Why the run could continue in AU shares

Sure, AU stock is up an astounding amount in a very short time frame, but it is worth pointing out that its fundamentals remain very solid. Overall, the company has a VGM Score of ‘A’, while it also has growth and value grades of, respectively, ‘B’ and ‘A’. Plus, even with the surge, the company retains a Value Score of ‘B’ thanks in part to its forward PE which remains below 20. So the big jump shouldn’t necessarily scare off value investors right off the bat.

Even more important to AU’s possible rise in the future is recent changes to earnings estimates by analysts. In the past month alone, the current year consensus has surged from 82 cents a share all the way to $1.08/share, while the next consensus has jumped from $1.00/share to $1.51/share. These increases represent shifts in the consensus estimate of 31% for the current year, and 51% for the next year, making for a huge jump in expectations.

ANGLOGOLD LTD Price and Consensus

ANGLOGOLD LTD Price and Consensus | ANGLOGOLD LTD Quote

And while that is definitely a good sign that analysts are ratcheting up expectations, it is also important to consider the most recent estimates for AU earnings too. For this look, we see a most accurate estimate of $1.25/share for the current year (15% higher than current consensus) and $2.04/share for next year (35% higher than consensus).

Clearly, the most recent estimates for AU stock are extremely bullish on their earnings prospects, suggesting that the company can continue its march higher in the weeks ahead. No wonder the stock currently has a Zacks Rank #1 (strong buy) and is in the best part of an industry currently ranked in the top five percent of all the ones we cover.

Bottom Line

Yes, shares of AU have run up significantly in the past few months, and there is reason for concern. However, the underlying fundamentals for this company remain strong, while gold’s rise appears to be just in the beginning stages too.

Due to these factors, investors should consider how impressive recent analyst estimates have been for AU stock and just how incredible the earnings picture looks for shares right now. Hopefully, this will help to show investors that this stock could still have some room to run assuming the gold bull market continues this summer.

And for more on gold mining stocks, make sure to check out our latest podcast on the topic below:

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