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Newmont (NEM) Up 17% in 6 Months: What's Behind the Rally?

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Shares of Newmont Mining Corporation (NEM - Free Report) moved up roughly 17% over the last six months. The company has also outperformed the industry’s gain of 8.2% over the same time frame.


Newmont, a Zacks Rank #1 (Strong Buy) stock, has a market cap of roughly $21 billion and average volume of shares traded in the last three months is around 4,642.7K.  

What’s Driving NEM?

Newmont’s efforts to strengthen its long-term growth pipeline and upbeat outlook for 2018 have contributed to a rally in its shares.

Last month, Newmont increased its attributable gold production guidance for 2018 to 4.9-5.4 million ounces from 4.7-5.2 million ounces expected earlier, largely driven by its Full Potential mine plan, recovery and throughput improvements.

The company has also revised its cost outlook for 2018. Newmont anticipates costs applicable to sales in the range of $700-$750 per ounce in 2018, compared with prior guidance of $700-$800, factoring in an increase in production in North America and Africa, and Full Potential efficiency and cost improvements across the portfolio.

All-in sustaining costs are projected to be between $965 per ounce and $1,025 per ounce for 2018, compared with the company’s earlier guidance of $950-$1,050.

Moreover, based on improved outlook and portfolio and balance sheet improvements, Newmont aims to increase its dividend by at least 50% in 2018. Moreover, the company expects to continue investing in margin and reserve growth and deliver a steady gold production at competitive costs over the next five years.

Newmont is making notable progress with its growth projects, including Subika Underground and Ahafo mill expansion in Africa.

Last month, Newmont landed a deal to further explore the potential Esperance gold discovery in French Guiana, owned by Compagnie Miniere Esperance. The deal enables the company to earn up to a 70% interest in the property through multi-year investments. Newmont stated that it is on track with its efforts to strengthen its long-term growth pipeline in potential exploration districts.

Moreover, Newmont increased its advanced and exploration projects investments by roughly 25% last year, almost two-thirds of which will be used to fund additional greenfields and brownfields exploration.


Other Stocks to Consider

Some other top-ranked stocks in the basic materials space are Methanex Corporation (MEOH - Free Report) , Huntsman Corporation (HUN - Free Report) and Kronos Worldwide Inc. (KRO - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Methanex has an expected long-term earnings growth rate of 15%. Its shares have soared 32% over a year.

Huntsman has an expected long-term earnings growth rate of 8%. Its shares have rallied 73.8% over a year.

Kronos has an expected long-term earnings growth rate of 5%. Its shares have surged a whopping 123.8% in a year’s time.

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