November 17th, 2021 | 13:11 CET
Barrick Gold, Triumph Gold, Newmont: Here is what matters for Barrick and Co.
Table of contents:
Barrick Gold: What makes a share sexy?
Barrick Gold's stock is the first choice for many investors when it comes to gold investments. But the stock has disappointed many, especially in recent months. Upwardly hesitant, downwardly full on - this is how the shares of Barrick Gold can be described from the perspective of a disappointed investor. But is the paper really so hopeless? A recent report takes a detailed look at Barrick Gold's stock. The conclusion reads consistently positive: Barrick benefits from rising gold prices and higher production volumes. Furthermore, the value has run less strongly relative to the benchmark index NYSE Arca Gold BUGS. In comparison with the largest gold producer globally, Newmont, the market observers note a significantly weaker performance. That could indicate some catch-up potential. But is that enough for price gains?
The crux of supposedly cheap stocks is that these relative undervaluations on the market do not come about for no reason. While Barrick Gold shines with an expected payout yield of 4%, the Company has not come up with much else to provide growth in recent years besides dividends. For Barrick to reduce its relative undervaluation, it will be important in the medium term for the Company to deliver catalysts that trigger share price increases. This new fantasy could come in the form of acquisitions. Barrick Gold has the necessary high cash flow. Now it is just a matter of finally getting the horsepower on the acquisition road.
Triumph Gold: Step by step to success
Although equipped with significantly fewer opportunities, the small Canadian gold company Triumph Gold has already implemented an acquisition in February and acquired another gold-copper concession area, Big Creek, from commodity producer Teck Resources. An interesting detail is that Teck paid itself in shares of Triumph Gold in addition to a net smelter return (NSR). Even before that, Newmont, among others, was one of the shareholders in Triumph Gold and still holds a 12.8% stake in the Company.
Newmont is a neighbor of Triumph Gold and even uses a road that runs through Triumph Gold's Freegold Mountain project. The Company already has the drill program planned for 2022. It is focusing its exploration efforts on sustainability and a diverse team that draws from various disciplines and represents the local community. With a market capitalization of around EUR 20 million, the stock is a flawless small cap that can benefit disproportionately if gold prices rise.
Newmont: ESG offensive leaves investors cold
Barrick Gold is not the only example of how difficult it is for large companies to achieve growth that also convinces the capital market. Newmont's performance in recent months has also been less than convincing. Although Newmont came through 2021 better than Barrick, it also lacks the necessary momentum. Most recently, Newmont announced with construction equipment manufacturer Caterpillar that it plans to invest USD 100 million in a joint venture to develop electric-powered and autonomous driving vehicles for mines. This news actually sounds like the future of mining and should open up new investor groups for Newmont. The reality, however, looks different: Over a period of three months, the share has only posted a meager return of just under 4%.
Those who want to invest in precious metals through shares will find Barrick and Newmont as titles of rank and name, but the great performance failed to materialize recently. Although these stocks are also likely to pick up in a new gold hype, investors should not forget the small caps, which are advancing promising projects step by step away from the big spotlight. The combination of gold and copper could also argue for experienced investors to take a closer look at Triumph Gold's stock. Only Newmont offers this kind of copper exposure. Unfortunately, the coveted industrial metal plays only a subordinate role at Barrick.
Conflict of interest
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