Self-Direct Your IRA Over to This Gold-Mining Stock

NEW YORK (TheStreet) -- I'm a strong believer of self-directed IRAs for retirement investing simply because it gives you the freedom to make your own investment decisions without taking away the opportunity of sufficient diversification.

If you're looking to buy stocks to maintain a balance, Alamos Gold (AGI) is one to consider.

Alamos is a name in the mining space that rarely gets mentioned, probably because it doesn't have the biggest reserves. But it's undeniable that all metrics available to us suggest the company is currently undervalued. Its shares, trading around $11, are down 14% for the year to date.

Alamos is super-efficient at keeping costs low, which helped the company to have the highest gross margin in a turbulent 2013.

In 2013, the company reported an all-in sustaining cash cost of $772 per ounce, which is one of the lowest -- if not the lowest -- in the industry. Just so you can appreciate that number, note that Newmont Mining (NEM) and Goldcorp (GG) reported all-in sustaining cost, or AISC, of $1,104 and $1,031, respectively.

Here is a history of top gold miners' AISC over the last two years.


The simple reason why Alamos Gold is able to outperform its competitors is it focuses on low-cost mines. And when a company can keep costs low in a very volatile industry like the mining industry, it's easy to keep healthy margins.

AGI Gross Profit Margin (Annual) Chart
AGI Gross Profit Margin (Annual)
data by YCharts

As the chart above shows, Alamos kept over 65% of its total revenue as profit. This becomes more appreciable when you compare it with other miners. Newmont Mining was the closest, with just a little more than half of what Alamos kept.  Alamos even outperforms the industry average of 47%.

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