WHAT ARE WE LOOKING FOR?
Gold stocks with potential to glitter.
Gold futures has been on a see-saw ride in recent months - unsure whether to make the leap over the $1,000 (U.S.) an ounce hurdle, and stay a while.
The yellow metal appeared poised to make a third assault on the $1,000 mark earlier this month. Some of the enthusiasm was fuelled by rising expectations of inflation following aggressive prime-pumping measures by the U.S. and other governments to keep their economies from sinking deeper into recession.
The price of gold closed just above $1,000 for one day in March 2008. It retreated after touching that level again in February, and surged to the $985-range recently before another pull back.
Gold for August delivery yesterday climbed $4.70 to close at $932.20 an ounce on the Comex division of the New York Mercantile Exchange.
We looked at companies in the iShares CDN Gold Sector exchange-traded fund (XGD-TSX). The ETF, which 22 tracks companies in the S&P/TSX global gold index, includes securities traded in Canada and the United States. The iShares CDN Gold Sector yesterday closed up 35 cents at $19.15 on the Toronto Stock Exchange - up from a 52-week low of $9.32 a unit last October.
Franco Nevada Corp., Gammon Gold Inc. and Osisko Mining Corp., were added to the gold index on March 20. Four more companies, including Allied Nevada Corp., Centamin Egypt Ltd., DRDGOLD Ltd. and Semafo Inc., will be added to the index this Friday.
WHAT DID WE FIND?
It looks like analysts are forecasting plenty of earnings growth from companies in this index. While analysts tend to value gold stocks by net asset value as opposed price to earnings ratios, many of the P/Es for these stocks are not inexpensive either.
|Earnings estimates for members of the iShares CDN Gold Sector Index Fund|
|Company||Ticker||Country||US$ Price June 15||1-mo. % price chg||This fiscal year EPS est. $||This fiscal year EPS % gwth||This year P/E||Next fiscal year EPS est. $||Next fiscal year EPS % gwth||Next year P/E||Dividend Yield (%)||EPS 5-yr Hist gwth|
|Gold Fields Ltd||GFI-N||ZA||11.27||-8.2||0.56||-9.3||20.0||0.92||63.6||12.3||2.2||18.5|
|Royal Gold Inc.||RGLD-Q||US||41.81||4.6||0.52||-23.2||80.0||0.82||56.6||50.9||0.7||-3.0|
|Red Back Mining||RBI-T||CA||8.01||-9.3||0.51||68.4||15.8||0.75||31.6||12.0||NA||NA|
|Yamana Gold Inc||YRI-T||CA||9.09||2.7||0.47||4.5||19.3||0.53||9.4||17.2||0.4||61.9|
|Alamos Gold Inc||AGI-T||CA||8.29||13.2||0.40||34.9||20.5||0.44||7.9||19.0||NA||216.2|
|Note: Includes 4 new stocks to be added to the index this Friday. All figures converted to US$|
© 2007 The Globe and Mail. All rights reserved.
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