Have you noticed a trend in many of the bulls of the day lately? Well, several have been in the gold mining space thanks to this segment’s incredible run and still-strong fundamentals. No wonder this has been such a popular space though, as the segment currently is in the top 3% from an industry look and only six other market segments are ranked higher out of more than 250 overall.
But it isn’t just a few companies pulling the rest higher in this market by any stretch, as only two of 34 names in the group have a Zacks Rank #4 (sell) or worse. On the flip side, more than a dozen have Zacks Rank #1 (Strong Buy) ratings, suggesting there are a number of great choices for investors in this surging corner of the market.
For this edition though, I am going to take a closer look at Barrick Gold (
ABX - Analyst Report) which is an impressive stock in its own right. This company is also one of the bigger ones in the space, so it could be a better choice for those concerned about recent volatility in this market segment, and for those looking for more of a large cap play.
The company also has impressive fundamentals, thanks to ‘B’ Grades for both Growth and Momentum. These solid grades are based on the company’s outperformance from a price momentum perspective, while some of its key growth stats—such as projected EPS growth of over 90% and a return on equity better than the industry average—are also underpinning its nice scores from these important looks.
But beyond the fundamental factors, investors should also note that ABX has been seeing rising earnings estimates in recent trading. For next quarter and the current year, we have seen two estimates go higher in the past week compared to zero lower, while the next year time frame has seen similar metrics.
The pace of these increases has also been notable, as the following quarter estimate has increased by nearly 40% in the past month, while we have seen the consensus estimate rise by over 15% for both the current year and following year in the past month too.
And best of all, the most recent estimates for ABX have been the most positive of all. Next quarter’s most accurate estimate is 22% higher than the current consensus, while the current year most accurate estimate is over 26% higher. In other words, analysts that have done their estimates most recently are the most bullish on ABX’s prospects, a great trend for investors seeking more gains in this corner of the market.
But before you start to worry about ABX living up to these lofty expectations, consider how the company has done in recent reports. The company is riding a streak of four straight beats, including an average surprise of over 25% in the time frame.
With improved estimates, strength in the most recent analyst looks at the stock, and a great history at earnings season, it is no surprise that ABX has earned itself a Zacks Rank #1 (Strong Buy) too. This puts it into rare company of just 5% of all stocks we cover, but an area that is certainly well-populated by other gold miners these days which are riding the positive fundamental story of surging gold prices and negative interest rates around the globe.
The gold mining market has been quite dicey lately, and we have certainly seen some sluggish trading in a few of the recent sessions. However, this could make for an interesting entry point ahead of the next leg higher, should fundamentals in this market hold.
But given that analysts are really liking the stories behind these companies from an earnings perspective and that gold is back in favor, there is plenty to be optimistic about in the gold market these days. And with central banks unlikely to move back to positive interest rates in a number of markets any time soon, there should be some decent support for gold and gold miners in the near term, making ABX worth a closer look by investors following the recent slump.
And for more on gold mining stocks, make sure to check out our latest podcast on the topic below:
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