Investors turned to precious metals last year to protect their wealth during the coronavirus-led economic slowdown and uncertainty. However, the precious metals’ market has since corrected to a degree on positive news on the vaccine front. In fact, the market seems now to be under pressure due an uptick in long-term U.S. interest rates and a strengthening dollar. Consequently, the yellow metal declined as much as 4.5% last week, the most since November 2020.
Newmont Goldcorp Corporation (NEM – Get Rating) is the world’s leading gold mining company and a producer of other precious and industrial metals, including copper, silver, zinc, and lead. NEM has the largest gold reserve base in the metals mining industry, underpinned by its world-class ore bodies in top-tier locations. The stock has lost nearly 4.2% in the last five trading days.
NEM was one of the best performing stocks in 2020, with record revenue and cash-flow growth. In the third quarter ended September 30, 2020, its revenue for the quarter increased 17% year-over-year to $3.17 billion, due primarily to higher average realized gold prices. NEM produced 1.5 million attributable ounces of gold during the quarter. Its operating cash flow from continuing operations increased 101% year-over-year to a record $1.6 billion. Its non-GAAP EPS came in at $0.87, compared to the year-ago value of $0.86.
With a solid gold rally on the back of robust demand, the stock gained 46.6% in 2020. This impressive performance and the potential upside based on several factors has helped it earn a “Buy” rating in our proprietary rating system.
Here is how our proprietary POWR Ratings system evaluates NEM:
Trade Grade: A
NEM is currently trading higher than its 50-day and 200-day moving averages of $61.83 and $61.90, respectively, which indicates that the stock is in an uptrend. In fact, the stock’s 6.2% return over the past month reflects short-term bullishness.
NEM and its joint venture partners recently achieved a key milestone. They announced the successful integration of the Alumbrera mine, plant and infrastructure with Yamana Gold’s (AUY) Agua Rica project to create the MARA project. Moreover, the company successfully completed two key projects last month at its Musselwhite mine in Canada, with the full commissioning of the mine’s conveyor system and material handling project.
Buy & Hold Grade: B
In terms of proximity to its 52-week high, which is a key factor that our Buy & Hold Grade considers, NEM is fairly positioned. The stock is currently trading 13.5% below its 52-week high of $72.22.
Over the past three years, the stock has returned nearly 70%. NEM’s top-line and EPS have grown at a CAGR of 15.3% and 168.1%, respectively, in the same period, driven by a sharp rise in gold shipments. NEM reported losses in 2017 but has improved its margins significantly since due to higher grade ores and higher realized gold prices.
NEM recently announced its 2021 outlook with attributable gold production guidance of…
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