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Prospecting for Gold Stocks

NEW YORK ( TheStreet) -- The uncertainty regarding whether or not the U.S. economy will fall off the fiscal cliff should be giving Comex gold a bid, but instead, the precious metal has been moving sideways to down since trading as high as $1,798.1 on Oct. 5 and as low as $1,672.5 on Nov. 5. This price action still has gold above its 200-day simple moving average at $1663.4.

When prospecting for gold mining stocks using I found seven that have "four-engine" buy ratings. All seven are undervalued by 18.4% to 45.2%. One has a gain of 41.1% over the last 12 months, while the other six are lower by 16.0% to 28.8%. By comparison Comex gold is up 6.9% over the last 12 months. Three of seven gold miners have single-digit 12 month trailing price-to-earnings ratios, three have reasonable P/E, while one has an elevated P/E.

Fundamentally ValuEngine shows the basic industries sector just 3.2% undervalued with the gold mining industry 10.5% undervalued, which is a reason to consider gold shares over Comex gold. The last time I made this type of comparison was on Sept. 10 when I wrote Gold Stocks Continue to Lag Gold .

With the gold mining industry undervalued and with most gold mining shares lagging gold significantly, investors considering buying gold should prospect among the gold miners I profiled today.

Reading the Table

OV/UN Valued: The stocks with a red number are undervalued by this percentage. Those with a black number are overvalued by that percentage according to ValuEngine.

VE Rating: A "1-engine" rating is a strong sell, a "2-engine" rating is a sell, a "3-engine" rating is a hold, a "4-engine" rating is a buy and a "5-engine" rating is a strong buy.

Last 12-Month Return (%): Stocks with a red number declined by that percentage over the last 12 months. Stocks with a black number increased by that percentage.

Forecast 1-Year Return: Stocks with a red number are projected to decline by that percentage over the next 12 months. Stocks with a black number in the table are projected to move higher by that percentage over the next 12 months.
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AU $15.40 -3.90%
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GG $19.02 -2.50%
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