Gold prices hit record highs recently due to increased speculation regarding the Federal Reserve interest rate cuts and escalating geopolitical tensions, which drove gold market momentum.

Therefore, investors could add fundamentally robust gold stocks Centamin plc (CELTF), Centerra Gold Inc. (CGAU), and Harmony Gold Mining Company Limited (HMY) to the portfolio now.

Gold is admired for its aesthetic appeal and valued for its enduring investment potential, consistently yielding profitable returns over time. Gold prices have surged to over $2,265 per ounce, hitting record highs, possibly due to expected Federal Reserve rate cuts and increased central bank bullion purchases.

Gold prices are expected to witness steady growth over the upcoming quarters till the first half of next year. Leading banks, including JPMorgan Chase & Co. (JPM) and Goldman Sachs Group Inc., (GS) support gold's positive outlook. JPM forecasts prices hitting $2,500 per ounce, while GS sees potential for $2,300, citing advantages amid lower interest rates.

Furthermore, heightened geopolitical tensions in the Middle East are dampening investor risk appetite, acting as a tailwind for the safe-haven yellow metal. Investors’ interest in gold stocks is evident from the iShares Gold Trust Micro ETF (IAUM) 21.5% gains over the past six months.

To that end, let’s examine the fundamentals of the three stocks to buy in the Miners - Gold industry, beginning with the third choice.

Stock #3: Centamin plc (CELTF)

Headquartered in Saint Helier, Jersey, CELTF explores, mines, and develops gold and precious metals in Egypt, Burkina Faso, Côte d'Ivoire, Jersey, the United Kingdom, and Australia.

Recently, CELTF announced the listing application for 2,650,000 ordinary shares on the London Stock Exchange. The shares will be issued to satisfy awards due to vest in 2024 under the Company's incentive plans. Shares are expected to be admitted to trading on 4 April 2024. Post-admission, the total issued share capital will comprise 1,161,082,695 ordinary shares.

On March 21, CELTF’s Board of Directors proposed the payment of a final dividend of 2 cents per share, equating to $23 million, for the six months ended December 31, 2023.

The final dividend brings the total dividend for the year ended 2023 to 4 cents per share , which translates to an annualized dividend yield of 2.90% on the current share price. CELTF’s four-year average yield is 5.70%.

On January 9, 2024, CELTF announced promising outcomes from its drill program in Egypt’s Eastern Desert Exploration (EDX) landholding. The EDX blocks cover 3,000 km of greenfield exploration tenements within Egypt’s untapped Nubian Shield. Further, its 2024 work program includes delineating potential resources and further drill targets in Egypt as part of the growth strategy.

CELTF’s trailing-12-month CAPEX/Sales of 22.76% is 200.7% higher than the industry average of 7.57%. Its trailing-12-month EBITDA and net income margins of 44.23% and 10.35% are 157.5% and 108.1% higher than the industry averages of 17.17% and 4.98%, respectively.

For the fiscal year that ended December 31, 2023, CELTF’s revenue and profit for the year before tax stood at $891.26 million and $195.14 million, up 13% and 14.1% year-over-year, respectively. Moreover, its adjusted EBITDA increased 24.8% from the previous year to $398.18 million.

For the same year, its profit for the year after tax attributable to the owners of the parent and earnings per ordinary share attributable to owners of the parent increased 27.3% and 26% from the year-ago value to $92.28 million and 7.82 cents, respectively.

Street expects CELTF’s revenue for the fiscal year ending December 2024 to increase 6.1% year-over-year to $945.85 million.

The stock has gained 33.6% over the past six months to close the last trading session at $1.40. Over the past month, it has gained 19.6%.

CELTF’s POWR Ratings reflect its positive prospects. The stock has an overall B rating, equating to Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree.

CELTF has a B grade for Value, Stability, and Quality. Within the Miners - Gold industry, it is ranked #4 out of 43 stocks.

To see additional POWR Ratings for Growth, Momentum, and Sentiment for CELTF, click here.

Stock #2: Centerra Gold Inc. (CGAU)

Headquartered in Toronto, Canada, CGAU acquires, explores, develops, and operates gold and copper properties in North America, Turkey, and internationally. 

On March 27, CGAU paid its shareholders a quarterly dividend of C$0.07 per common share, approximately $11.20 million. Its annualized dividend is $0.21 per share, which translates to a dividend yield of 3.58% on the current share price. Its four-year average yield is 2.61%. Over the past three years, CGAU’s dividend payments have grown at a 5.9% CAGR.

Under CGAU’s Normal Course Issuer Bid (NCIB) program, the company repurchased and canceled 361,500 common shares in the fourth quarter that ended December 31, 2023, for a total consideration of $2.10 million. Additionally, during the year ended December 31, 2023, CGAU repurchased and canceled 3.48 million common shares for a total consideration of $20.40 million under its NCIB program.

On February 14, CGAU and its subsidiary, Thompson Creek Metals Company Inc., struck an agreement with RGLD Gold AG, a subsidiary of Royal Gold, Inc. (RGLD), relating to the Mount Milligan Mine, resulting in a life of mine extension to 2035 and also establishes favorable parameters for potential future mine life extensions. The additional agreement will potentially unlock incremental mineral reserves and resources at Mount Milligan for mutual gain.

CGAU’s trailing-12-month levered FCF margin of 21.19% is 301.2% higher than the industry average of 5.28%. Similarly, its trailing-12-month cash per share of $2.84 is 92.9% higher than the industry average of $1.47.

For the fiscal fourth quarter that ended December 31, 2023, CGAU’s revenue increased 63.2% year-over-year to $340 million. Moreover, its free cash flow stood at $111 million, compared to a free cash deficit of $25.30 million in the year-ago quarter.

For the same quarter, its adjusted net earnings and adjusted net earnings per share stood at $61.20 million and $0.28, compared to adjusted net loss and adjusted net loss per share of $13.70 million and $0.06, respectively.

Street expects CGAU’s revenue for the fiscal first quarter that ended March 2024 to increase 20.1% year-over-year to $272.16 million. Its EPS is expected to be $0.14 for the same quarter. The company surpassed consensus revenue estimates in three of the trailing four quarters, which is impressive.

The stock has gained 21% over the past six months to close the last trading session at $5.93. Over the past month, it has gained 14.3%.

CGAU’s POWR Ratings reflect this promising outlook. It has an overall rating of B, which indicates Buy in our proprietary rating system.

CGAU has an A grade for Growth and a B for Value and Quality. Within the same industry, it is ranked #3.

For CGAU’s other ratings (Momentum, Stability, and Sentiment), click here.

Stock #1: Harmony Gold Mining Company Limited (HMY)

Headquartered in Randfontein, South Africa, HMY explores, extracts, and processes gold. The company explores for uranium, silver, copper, and molybdenum deposits. 

HMY’s Board approved an interim gross cash dividend of 7.61 cents per ordinary share for the six months that ended December 31, 2023, payable to the registered shareholders on April 15. Its annualized dividend is $0.12 per share, which translates to a dividend yield of 1.47% on the current share price. Its four-year average yield is 0.98%.

HMY announced that total gold production for the six months ended December 31, 2023, was between 820,000 ounces and 835,000 ounces, an increase of around 12% to 14% compared to the six months ended December 31, 2022.

HMY’s trailing-12-month CAPEX/Sales of 13.69% is 80.8% higher than the industry average of 7.57%. Its trailing-12-month EBIT and net income margins of 21.29% and 15.50% are 90.6% and 211.5% higher than the industry averages of 11.17% and 4.98%, respectively.

For the six months that ended December 31, 2023, HMY’s revenue and gross profit stood at $1.68 billion and $462 million, up 25.2% and 165.5% year-over-year, respectively.

For the same period, its net profit for the period attributable to owners of the parent and earnings per ordinary share increased 197.2% and 200% from the year-ago period to $318 million and 51 cents, respectively.

The company projects to produce between 1.38 million and 1.48 million ounces of gold and gold equivalents for the fiscal 2024, at an all-in-sustaining costs (AISC) of below R975,000/kg ($51,566.10/kg).

Street expects HMY’s revenue for the fiscal year ending June 2024 to increase 19.4% year-over-year to $3.15 billion.

The stock has gained 115.2% over the past six months to close the last trading session at $8.09. Over the past year, it has gained 97.3%.

HMY’s robust prospects are reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.

HMY has an A grade for Growth and a B for Value and Quality. It is ranked #2 within the same industry.

Click here for the additional POWR Ratings for HMY (Momentum, Stability, and Sentiment).

What To Do Next?

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HMY shares rose $0.27 (+3.34%) in premarket trading Tuesday. Year-to-date, HMY has gained 35.93%, versus a 9.51% rise in the benchmark S&P 500 index during the same period.

From her school days, Neha harbored a profound fascination for finance, a passion that steered her toward a career as an investment analyst following the completion of her bachelor's degree in commerce. Currently enrolled in the CFA program, Neha is dedicated to further enriching her comprehension of investment fundamentals. Neha's primary objective is to aid retail investors in discerning optimal investment opportunities by diligently evaluating crucial aspects of financial instruments, with a primary focus on stocks and ETFs. Her commitment lies in empowering individuals to make informed and strategic investment decisions in the dynamic world of finance.

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