Beating Barrick, Goldcorp: Under the Radar

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BOSTON (TheStreet) -- Eldorado Gold Corp.(EGO Quote), based in Vancouver, isn't as selfish as its ticker implies.

The company transferred its U.S.-listed shares to the New York Stock Exchange on Oct. 22 and has already rewarded investors with a 13% return. As long as the U.S. dollar declines, investors will continue to buy gold, bolstering Eldorado's margins. We rate the gold-producer "buy" and recommend its shares for purchase.

Third-quarter net income increased 77% to $30 million and earnings per share climbed 60% to 8 cents, restrained by a higher share count. Revenue grew 26% to $82 million. The company's gross margin rose from 64% to 66% and its operating margin ascended from 29% to 40%. Eldorado's earnings benefited from lower exploration costs and a gain from foreign currencies.

The company's balance sheet is durable, with $160 million of cash and marketable securities and just $150,000 of debt. We give Eldorado a financial-strength score of 9.2 of 10, higher than the "buy"-list average of 7.1. The company has operations in Turkey, China, Brazil and Greece and, in addition to gold, also mines for iron ore. Its most productive investment is the Kisladag mine in Turkey.

Eldorado is one of the world's lowest-cost gold producers. Management is forecasting fiscal-year production between 325,000 and 340,000 ounces at a cash operating cost of $300 per ounce. Gold now fetches more than $1,100 an ounce on major exchanges. And Eldorado, which has unhedged exposure to the metal, boasts significantly higher margins than larger peers, including Barrick(ABX Quote) and Goldcorp(GG Quote).