Top Five Metals and Mining Stocks

Capital Gold, Royal Gold, Eldorado Gold, Newmont Mining and Compass Minerals are rated 'buy.'
By Jake Lynch ,

BOSTON (TheStreet) -- Here are the top five metals and mining stocks, according to the TheStreet's equity model. They are ordered by potential to appreciate, from worst to best.

5. Capital Gold

(CGC) - Get Report

owns the El Chanate gold mine in Mexico.

Quarter

: Fiscal first-quarter profit soared 52% to $2.9 million, but earnings per share were little changed at 4 cents. Revenue grew 28% to $12 million. The operating margin climbed from 39% to 45%. Capital holds $6.8 million of cash and $7.1 million of debt.

Stock

: Capital Gold has gained 12% during the past year, trailing U.S. indices. The stock trades at a PEG ratio, a measure of value relative to expected growth, of 0.2, a 73% discount to its peer-group average. A PEG ratio below 1 implies cheap shares.

Consensus

: Capital Gold has a market value of $185 million, so few analysts cover the stock. Of those that do, they are divided equally, with one "buy", one "hold" and one "sell" rating.

Dahlman Rose

expects the stock to double in value to $7.81.

4. Royal Gold

(RGLD) - Get Report

holds royalty interests in mines.

Quarter

: Fiscal second-quarter profit tumbled 55% to $9.6 million, or 23 cents. Revenue more than doubled to $35 million. Royal Gold's operating margin widened from 16% to 44%. Its balance sheet contains $317 million of cash and no debt.

Stock

: Royal Gold has advanced 20% during the past year, lagging behind major benchmarks. The stock trades at a price-to-book ratio of 2.4, a 42% discount to the industry average. It's expensive based on projected earnings and cash flow.

Consensus

: Among analysts following the company, two advise purchasing its shares and five recommend holding them.

Barnard Jacobs Mellet

projects the stock will hit $65, a 44% gain. Our model expects the stock to hit $59.10.

3. Eldorado Gold

(EGO) - Get Report

is a gold miner.

Quarter

: Third-quarter profit soared 77% to $30 million, or 8 cents, as revenue grew 26% to $82 million. The operating margin expanded from 29% to 40%. Eldorado Gold holds $160 million of cash, equating to a current ratio of 5.6, and no debt.

Stock

: Eldorado Gold has increased 22% during the past year, underperforming U.S. indices. The stock sells for a price-to-sales ratio of 19 and a price-to-book ratio of 4.2. A three-year revenue growth rate of 70% justifies the expensive share price.

Consensus

: Of analysts covering Eldorado Gold, 15 recommend purchasing its shares while six advocate holding them.

CIBC

(CM) - Get Report

expects the stock to gain another 53% to $20. Our model projects a $17 price target for the stock.

2. Newmont Mining

(NEM) - Get Report

produces gold and copper.

Quarter

: Fourth-quarter profit rose to $558 million, or $1.13, from $4 million, or 2 cents. Revenue doubled to $2.5 billion. Newmont's operating margin climbed from negative territory to 47%. Its balance sheet stores $3.3 billion of cash and $4.8 billion of debt.

Stock

: Newmont Mining has risen 37% during the past year, trailing major benchmarks. The stock trades at a price-to-projected-earnings ratio of 13, a 33% discount to its peer-group average. It's also cheap based on book value and cash flow.

Consensus

: Of firms following the stock, 12 have "buy" ratings, eight say to hold and one recommends selling the shares. Barnard Jacobs Mellet says the shares could rise 53% to $77. Our model predicts a price of $65.98.

1. Compass Minerals

(CMP) - Get Report

sells salt and specialty fertilizer.

Quarter

: Fourth-quarter profit dropped 22% to $63 million, or $1.88, as revenue declined 20% to $312 million. The operating margin remained steady at 32%. Compass Minerals holds $14 million of cash and $491 million of debt.

Stock

: Compass Minerals has advanced 30% during the past year, less than U.S. indices. The stock sells for a price-to-projected-earnings ratio of 11, a 40% discount to its peer-group average. Its PEG ratio of 0.8 reflects a discount based on expected growth.

Consensus

: Of analysts covering Compass Minerals, four think it's still a good time to buy shares while four recommend holding them. The most bullish price target comes from

Soleil Securities

, which expects the stock to rise 22% to $95.

-- Reported by Jake Lynch in Boston.

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