3 Gold Stocks That Still Glitter
Karen is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
As the economic situation in Europe continues to deteriorate, investors once again look to gold as a refuge against the ongoing storm. Although gold prices bounce right back up after brief dips down, gold mining stock prices remain low and present a buying opportunity.
There are plenty of gold mining stocks to choose from, but not all are worthy of an investor’s money. The three gold mining stocks featured here have very strong balance sheets, post profitable quarters and have been in the gold mining business for at least 20 years.
Barrick Gold (NYSE: ABX) is headquartered in Toronto, Ontario, Canada, and was founded in 1983. Barrick Gold is the world’s largest gold mining company and has the gold industries only “A” rated balance sheet. The company has 26 mines worldwide.
In 2011, Barrick Gold had proven and probable gold reserves of 139.9 million ounces, 1.7 billion ounces of silver, and 12.7 billion pounds of copper. The company estimates 2012 gold production between 7.3 – 7.8 million ounces.
Barrick Gold has an experienced and talented board of directors that aggressively looks for ways to lower costs. The company has a market cap of $37.94 billion and operating cash of $5.15 billion. Revenue for 2011 was $14.3 billion compared to $11 billion for 2010; net income for the same period was $4.5 billion and $3.5 billion, respectively. The company has a debt-to-equity ratio of 50.51, a current ratio of 1.72, and a return on investment of 18.69%. Barrick’s raised their quarterly dividend 33% in May this year to $0.80 per share. The dividend yield is 2.10%. The stock currently trades around $38.00 per share, and has a 52-week range of $34.82 to $55.95.
Taseko Mines (NYSEMKT: TGB), located in Vancouver, British Columbia, Canada, has been in business since 1966. The company has four primary mines: the Gibraltar copper molybdenum mine, New Prosperity gold-copper mine, Aley niobium mine and the Harmony gold mine.
Taseko’s untapped ore deposits are quite impressive. The company estimates their Harmony gold mine has gold deposits of 64 million tons, while the Prosperity mine has 13.3 million ounces of gold and 5.3 billion pounds of copper deposits.
Reflecting the volatility inherent in mining stocks, company financials contain both strengths and weaknesses. The company has a strong balance sheet with cash reserves exceeding debt by about $100 million and has a market cap of $544.06 million. Reflecting the high capital investment required by mining operations, Taseko has a high debt to equity ratio of 48.38. Taseko has a return on equity of 2.66% and a current ratio of 4.96. The company posted 2011 revenues of $251.7 million or $0.14 per share, as compared to 2010 revenues of $278.5 million or $0.80 per share. The stock currently trades around $2.80 per share and the 52-week price range is $2.30 - $5.08.
Newmont Mining (NYSE: NEM), based near Denver, Colorado, is one of the world’s oldest and largest gold mining operations. The company started in 1921 and is the only gold mining company listed on the S&P.
The company operates mines in the U.S., Australia, Peru, Indonesia, Ghana, Canada, New Zealand and Mexico and has proven and possible gold reserves of 98.8 million ounces. The Golden Mine located at Kalgoorlie in Western Australia produced 754,000 ounces of gold in 2010 and has proven and probable gold reserves of 7.54 million ounces.
Newmont Mining has excellent management in place and a very strong balance sheet. The company has a low debt to equity ratio of .38, a current ratio of 2.37, and a return on equity of 13.64%. The company reported revenues of $10.4 million in 2011 and $9.5 million in 2010. Net income for 2011 was $366,000, and $2.277 million in 2010. The company paid a 2011 dividend of $0.73, and $4.55 in 2010. The current stock price is around $50.26 and the 52-week trading range is $43.23 - $72.42.
Barrick Gold, Taseko Mines and Newmont Mining have proven and probable gold reserves that will keep them profitable for years. Their low stock prices could be a buying opportunity for investors looking to gold mining stocks as insurance against volatile financial markets.
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