Gold Stocks Lag the Breakout in Gold Prices
Forecast 1-Year Return - All 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.
Value Level: the price at which to enter a GTC limit order to buy on weakness. The letters mean: W-weekly, M-monthly, Q-quarterly, S-semiannual and A-annual.
Pivot: a level between a value level and risky level that should be a magnet during the time frame noted.
Risky Level: the price at which to enter a GTC Limit Order to sell on strength.
Analysis of the Gold StocksLooking at the overvalued and undervalued data, all six of the gold stocks are undervalued, with Kinross Gold (KGC - Get Report) the cheapest at 53.2% undervalued. Five of the six gold stocks have a "4-Engine" buy rating. Harmony Gold (HMY - Get Report) was rated a buy until this morning, when the stock was downgraded to a "3-Engine" hold rating, according to ValuEngine.com. All six gold stocks lagged Comex gold and GLD, which are down 13.3% and 13.0%, respectively, over the last 12 months. KGC is the biggest loser, down 49.7%. All of the gold stocks are projected to be higher over the next 12 months, led by Barrick Gold (ABX - Get Report), which is projected to rise by 8.1% over the next 12 months. The P/E ratios are reasonable to cheap at between 8.4 times earnings for Gold Fields (GFI - Get Report) and 11.9 times for Newmont Mining (NEM). The 200-day simple moving averages are reasonable upside targets for the buy-rated names in anticipation that, as long as gold futures and GLD stay above their 200-day SMAs, there will be strength in gold shares towards their 200-day SMAs. At the time of publication, the author had no positions in any of the investments mentioned. This article is commentary by an independent contributor, separate from TheStreet's regular news coverage.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts