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Bull of the Day: Newmont Mining (NEM)

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Thanks to a few Fed member comments, some investors were worried that the Federal Reserve would shock the markets and hike rates in the September meeting. However, not only did the Fed keep rates at their current levels, but they actually lowered rate hike forecasts for the future as well.

So while a rate hike seems likely before the year is out, that could be it for a while. This is in somewhat sharp contrast to even just a few weeks ago, and it is a good reminder that the Fed is going to go low and slow for quite some time.

Market Impact & Where to Look Now

This shift in expectations has led to a nice boost for dividend stocks, foreign securities, and also anything linked to commodities. As the Fed looks to keep rates low investors will increasingly look to precious metals, which is great news for miners in the space.

That is why now could be a perfect time to look at the gold mining industry for some top picks, as securities here can act as leveraged plays on the movement in the price of gold, while the industry rank is currently in the top 50% too. And while there are plenty of great choices in this market, it is going to be hard to beat Newmont Mining (NEM - Free Report) in the near term.

Why NEM?

NEM is one of the larger and more established mining companies in the gold world, with a market cap over $20 billion. Like many companies in the space, it has been on a tear this year, with gains of over 100% in the time frame. But unlike several of its competitors, analysts are remaining bullish on the company’s prospects, as earnings estimates have been on the rise for this company.

In fact, not a single analyst has decreased their earnings estimate in the past two months for either the current quarter or the current year time frames. And it isn’t like the estimate shifts have been small either, as the current quarter consensus has increased by 20% in the past two months, while the full year figure has gone up about 28% in the same time frame.

Thanks to these figures, NEM is now projected to more than double earnings this quarter compared to last year, as it is projected to post earnings of 54 cents this quarter compared to 23 cents a year ago. And the full year is almost as impressive, as NEM is expected to grow earnings by 91% in that time frame as well.

NEWMONT MINING Price, Consensus and EPS Surprise

NEWMONT MINING Price, Consensus and EPS Surprise | NEWMONT MINING Quote

That is how NEM can maintain a forward PE below 22 despite its incredible gains this year, and why the company’s prospects for the near term remain bright. These recent estimates are also why NEM has earned itself a Zacks Rank #1 (Strong Buy), which puts the company into the top five percent of all the stocks we cover.

Bottom Line

The Fed’s actions, or really, the lack of action from the Fed, could spark a nice rally in precious metals and act as a catalyst for more gains in this surging space. Most companies already have nice earnings estimate revision trajectories, and this Fed situation only makes choosing this sector even more compelling.

And while there are several that could make sense for investors right now, it is hard to go against Newmont Mining in this environment. The company has a great track record in earnings season, still is a decent value, and is poised to grow earnings at an incredible rate too. Definitely give this company a closer look if you are seeking a top name in this in-focus corner of the market.

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