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Why You Should Add Kinross (KGC) to Your Portfolio Right Now

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Kinross Gold Corporation (KGC - Free Report) stock looks promising at the moment. The company’s shares have rallied nearly 87% year to date.

We are positive regarding the company’s prospects and believe that the time is right to add the stock to your portfolio. The stock looks promising and is poised to carry the momentum ahead.

Let's discuss the factors that make this Zacks Rank #2 (Buy) stock an appropriate investment option at the moment.

An outperformer

Shares of Kinross have significantly outperformed the industry. The stock has rallied 88.3% in the past year compared with the industry’s 51.6% rise. It also outpaced the S&P 500’s rise of 16.2% over the same time frame.

Strong Q2 Performance

Kinross reported profits of $195.7 million or 15 cents per share in second-quarter 2020, up from $71.5 million or 6 cents per share reported in the year-ago quarter. Earnings also beat the Zacks Consensus Estimate of 14 cents.

Also, the company’s revenues rose 20.2% year over year to $1,007.2 million, partly supported by higher average realized gold prices.

Bright Prospects from Growth projects

Kinross is making steady progress in advancing major projects that have a strong growth profile. The company is likely to gain from organic development projects and opportunities in the Americas. Paracatu is one of its largest producing mines of the company that is operating at a low cost of production and delivering strong output.

Moreover, the Gilmore project at Fort Knox is a low-cost brownfield expansion with low-risk that is likely to extend mine life to 2030. Kinross is also expected to gain from strong production at Tasiast. The Tasiast 24k project remains on schedule and is expected to increase throughput capacity to 21,000 tons per day by the end of 2021.

Higher Gold Prices to Boost Margins

Gold has been the bright spot this year as mounting fears over the coronavirus pandemic made it the most attractive safe-haven asset. A slump in crude oil prices, low interest rate environment and geopolitical tensions also triggered demand for gold.  

Gold prices crossed the $1,800-an ounce mark in June 2020 and also surged past the $1,900 an ounce mark in July. Prices also crossed the $2,000-an ounce level earlier this month for the first time on strong safe-haven demand. Meanwhile, Kinross’ average realized price of gold rose 31% year over year to $1,712 per ounce in the second quarter and boosted margins. Higher gold prices are expected to continue driving earnings amid market volatility and economic uncertainties.

Positive Estimate Revisions & Earnings Growth

Earnings estimate revisions have great impact on stock prices. The Zacks Consensus Estimate for Kinross’ third-quarter earnings moved up 35.7% in the past two months. The company’s earnings for 2020 are currently pegged at 68 cents per share, which calls for a year-over-year growth of 100%.

VGM Score

Kinross currently has a VGM Score of B. Our research shows that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or 2 offer the best investment opportunities to investors. Thus, the company is an appropriate investment option at the moment.

Other Key Picks

Some other top-ranked stocks in the basic materials space include Golden Star Resources Ltd. (GSS - Free Report) , Eldorado Gold Corporation (EGO - Free Report) and Yamana Gold Inc. (AUY - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

Golden Star Resources has an expected earnings growth rate of 12.5% for 2020. The company’s shares have surged 72.4% in the past year.

Eldorado Gold has an expected earnings growth rate of 2,225% for 2020. Its shares have returned 30.1% in the past year.

Yamana has an expected earnings growth rate of 76.9% for 2020. The company’s shares have soared 81.8% in the past year.

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