In times of crisis, gold is often seen as a safe haven. It may be prudent to purchase gold mining stocks B2Gold, Centamin and Dundee Precious Metals to protect your portfolio from economic uncertainty and volatility. Read more ....
The Federal Reserve has set a 2% inflation target. Despite the fact that inflation has declined significantly in recent months, the rate remains higher than the Federal Reserve's target. Consumer prices are expected to remain high in April, according to the Consumer Price Index data. The Fed economists also predict a slight recession in the second half of this year.
Investors must protect their portfolios as fears of a possible recession rise. Investing in gold is one way to achieve this. In times of economic uncertainty, gold is considered a safe investment. It would therefore be prudent to invest in the gold stocks B2Gold Corp.
Let's first discuss the reasons why gold stocks are a good investment right now.
The Fed announced its tenth rate hike last week of 25 basis points. It indicated that it may pause the rate hikes but would evaluate macroeconomic data before its next meeting, scheduled for June. Estimates suggest that April's CPI will rise by 5% over the past year, matching March's gain. Consumer prices are expected have increased 0.4% sequentially in April, compared to the 0.1% rise in March.
The job market was also strong, as the U.S. added 253,000 nonfarm jobs in the last month, compared with expectations of 185,000. The Fed may be prompted to raise rates again in June by this string of positive macroeconomic data. This would confirm the Fed's expectation of a slight recession in later this year and keep investors on edge.
Investors who are worried about the economy may decide to move their money away from more risky assets such as equity and cryptocurrency and into safe assets, like gold. Gold is considered a relatively secure and stable investment. Gold stocks can provide investors with exposure to gold without having to purchase it.
Gold is in constant demand around the globe, and it's unlikely that a recession anywhere will affect its price.
Gold prices rise as gold demand increases. This is good for gold mining companies. Gold mining companies can also benefit from lower oil costs during a recession. Gold miners are heavily reliant on energy costs. When oil prices fall, these costs will also decrease, resulting in a rise in profit margins.
Let's talk about the fundamentals for the stocks featured.
B2Gold Corp. (BTG)
BTG, a gold-producing company with its headquarters in Vancouver, Canada has three mines located in Mali and the Philippines. The Fekola Mine in Mali is operated by BTG. It also operates the Masbate Mine in the Philippines and the Otjikoto Mine in Namibia. The company owns a 25% stake in Calibre Mining Corp. and a 19% stake in BeMetals Corp.
BTG announced on April 19, 2023 that it had completed its previously announced plan to purchase Sabina Gold & Silver Corp. BTG President and CEO Clive Johnson stated, 'The closure of the Sabina acquisition and the Back River Gold District is a landmark for B2Gold, as we continue to develop a low-cost, responsible senior gold mining firm.
He added: 'We're excited to welcome Sabina's exceptional team to B2Gold. We're also thrilled to have such a high quality, high grade gold project in an excellent mining jurisdiction.
BTG's gross profit margin for the 12 months prior is 57.03%, which is 101.6% more than the industry average of 28.29%. The 52.92% EBITDA trailing-12 month margin is 193.7% greater than the 18.02% industry average. The stock's Capex/Sales ratio of 22.06% for the trailing 12-month period is 260.8% greater than the industry-average of 6.11%.
BTG's revenue from gold increased by 29.5% to $473.56 millions for the first quarter ending March 31, 2023. The gross profit increased by 53% to $213.63 millions over the previous quarter. Operating income grew by 49% over the past year to $175.92 millions. Net income rose 12.2% to $101.90M over the previous quarter. Its EPS was also flat on an annual basis at $0.08.
Analysts predict that BTG's earnings per share (EPS) and revenue will increase by 61.3% over the past year to $0.06, and by 19.6% to $456.66, respectively. The stock price has risen 27.1% in the last six months to $4.17.
BTG's PoWR Ratings reflect a positive outlook. BTG's overall rating is B, which in our rating system translates into a Buy. The POWR ratings assess stocks based on 118 factors, each of which has its own weighting.
It is ranked 7th out of 39 stocks within the B-rated Miners-Gold industry. It is rated A for Quality and B for Value. Click here to view the other ratings for Growth, Momentum Stability and Sentiment.
Centamin plc (CELTF)
CELTF, with its headquarters in Saint Helier in Jersey, is engaged in exploration, mining and development of precious materials in Egypt, Burkina Faso Cote d'Ivoire Jersey, United Kingdom and Australia. It explores gold deposit.
CELTF has a trailing 12-month EBITDA Margin of 39.46%, which is 119% more than the industry average of 18.02%. The 9.19% net income margin for the trailing 12-month period is 26.7% more than the average industry figure of 7.25%. The stock's Capex/Sales ratio of 34.98% for the trailing 12-month period is 472.1% more than the average industry figure of 6.11%.
CELTF's revenue for the first quarter ending March 31, 2023 increased 18% over the prior-year quarter to $205,20 million. The company's free cash flow increased 138% over the previous quarter, to $8.10 millions. The realized gold price of the company increased marginally from $1,902/oz to $1.902/oz. The company's gold sales increased by 16% over the past year to 107.661 oz.
CELTF is forecast to have revenue of $209.30 millions for the quarter ending June 30th, 2023. This represents a 1% increase over last year. The stock closed the last trading day at $1.41, a gain of 29.4% over the past year.
CELTF's Power Ratings show solid prospects. It is rated B overall, which in our rating system translates into Buy.
It is rated B for Value, Stability and Quality. It is ranked third in the same sector. Click here to see CELTF's other ratings for Growth, Momentum and Sentiment.
Dundee Precious Metals Inc.
DPMLF, a gold-mining company based in Toronto, Canada is involved in the acquisition of mineral properties, exploration, development and mining of precious metals. It operates a copper, gold and silver mine east of Sofia in Bulgaria, as well as a gold and copper mine in the southeast part of Bulgaria.
DPMLF announced on March 30, 2023 that the mine life at the Chelopech Mine, Bulgaria was extended to 2031. DPMLF President and CEO David Rae stated, "With mining expected to continue into 2031, as well as a strong resource base and increased drilling in the mine and brownfield, we believe that this trend will continue at Chelopech."
DPMLF has a 20.72% levered FCF Margin, which is 486.2% more than the industry average of 3.54%. The 9.74% net income margin for the trailing 12-month period is 34.3% greater than the average industry figure of 7.25%. The stock's Capex/Sales ratio of 14.56% for the trailing 12-month period is 138.1% more than the average industry figure of 6.11%.
DPMLF’s revenue for the quarter ending March 31, 2023 increased by 1.3% over the previous year to $155.83 millions. Costs and expenses decreased 10.9% over the past year to $106.84 millions. The net income of the company increased by 73.7% over the past year to $46.60 millions. The company's EPS was $0.24, which represents a 71.4% increase year-over-year.
Analysts predict that DPMLF will have revenue of $187.03 millions for the quarter ending on June 30, 2023. This is a 39.1% increase over last year. The stock closed the last trading day at $7.95, up 66.7% for the year.
The strong fundamentals of DPMLF are reflected by its POWR ratings. The rating is A which in our proprietary system translates into Strong Buy.
It is rated A for Quality and Stability, and B for Growth. It is ranked second in the Miners - Gold Industry. You can click here to view the other ratings for DPMLF Momentum and Sentiment.
The bear market is not over...
BTG shares have gained 20.14% year-to-date compared to the benchmark S&P 500 index which has risen 8.79%.
About the Author: Dipanjan B.
Dipanjan has been interested in stock markets since he was a child. Dipanjan obtained a Master's Degree in Finance and Accountancy. Dipanjan is a financial journalist and investment analyst. He has a keen interest in analyzing and reading about emerging trends on financial markets.