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Barrick Gold (NYSE:GOLD): A Buying Opportunity For All Economic Conditions

Monday, August 10, 2020 | Steve Anderson
Barrick Gold (NYSE:GOLD): A Buying Opportunity For All Economic Conditions

It might be hard to see, at first glance, how a gold miner might be an unexpected winner in the COVID-19 era, if you can really call anything a winner in this situation. For Barrick Gold (NYSE:GOLD), however, it's delivered some impressive results through what may be the worst period of the US economy ever, certainly since the Great Depression. Looking at its second-quarter results, meanwhile, shows a company that's benefited from some rather unexpected market moves.

Barrick Gold's Numbers Come Up Pure Gold

Just looking at the numbers suggests a company in the midst of a gold rush of its own; both profit and revenue are up for the second quarter, bringing in $357 million, around $0.20 per share. That compares marvelously with the second quarter of 2019, where the company brought in $194 million, roughly $0.11 per share.

Estimates were also rather handily dispensed with, as a FactSet consensus looked for $0.18 per share out of the company in adjusted earnings, and Barrick Gold posted $0.23. Revenue also came in above expectations, with $2.89 billion expected and $3.06 billion realized. That's also up substantially from 2019 figures, where the company brought in $2.06 billion.

The gold miner also hasn't slowed down much even with a pandemic in play; the company has so far brought in 2.4 million ounces of gold, which is pretty much exactly where the company should be. Its full-year expectations for total gold recovery are between 4.6 million and five million ounces even. Several of the company's gold mines are doing quite well, including the Nevada Gold Mines in the US, Kibali in the Democratic Republic of Congo, and Mali's Loulo-Gounkoto mine.

Just to top it off, the company did the one thing that almost never misses in terms of drawing attention: it raised its dividend. The second quarter's dividend is $0.08 per share, which is up 14% against the previous quarter. Those who own shares by August 31, 2020, can get in on the action therein.

It Helps When Everyone Wants Your Product

Looking at Barrick Gold's figures over a year makes it clear this is a company in the midst of a general rise. The company spent most of the latter half of 2019 locked in a very tight pattern between $15 and $20 per share, and virtually all of that was right around $18 with very little deviation. This came after a surprising rise from May, when it closed out the month at $12.42.

Of course, the company was also caught up in the coronavirus sell-off, which famously kicked in back around late March, but recovery was quick; the company pulled back to its late-2019 trading range in a little under a week, and then started a meteoric upward rise from there. So far upward, in fact, that the company's trading close for last Friday was $29.50.

The company's rapid gains can readily be traced back to the massive upswing in gold prices, which have recently crossed all-time high territory and don't show a lot of sign of slowing down. The massive run-up in gold prices is also pretty readily traced back to a central source: frantic government spending in the face of the coronavirus. Not just in the notoriously spendthrift United States, either; governments the world over are spending on gigantic healthcare projects and trying to provide some economic assistance at the same time.

A Buy for the Long Haul

Here's the part that makes Barrick Gold particularly attractive. The chances of gold prices slipping any time soon is pretty slim, thanks to that aforementioned frantic government spending. That's going to make investors seek out safe havens to serve as hedges, and when it comes to safe-haven assets, it doesn't get much safer than gold. Some here will quickly try to make a case for silver, and not without cause, but gold tends to get more of the notice.

Barrick has another side to it, meanwhile, that makes it further attractive; it has a presence in copper mining and expects to draw out between 440 and 500 million pounds of copper this year alone. If there is an economic recovery, the demand for gold will likely plummet as safe-haven investors return to equities, but that same process will also likely spark industrial demand, which will in turn need copper desperately in order to make both industrial machines and commercial products. Barrick Gold effectively has a foot in each set of economic conditions, either disaster or boom, and that makes Barrick Gold a stock worth considering much more closely.

Companies Mentioned in This Article

CompanyBeat the Market™ RankCurrent PricePrice ChangeDividend YieldP/E RatioConsensus RatingConsensus Price Target
Barrick Gold (GOLD)1.7$27.65+1.9%1.16%11.06Buy$28.68
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8 Stocks That Robinhood Investors Got Right

The online investing app Robinhood has been a clear pandemic winner. As more Americans were forced to work from home, many made the decision to begin testing their investing skills by trading stocks. Robinhood appeals to millennial and/or novice investors for several reasons. First, the app makes it fun. You might say it “gamefies” stock trading. With commission-free trades, investors have an incentive to trade frequently. And many users of the app do just that.

The second reason is that it allows investors to buy partial (or fractional) shares. Although Robinhood is often associated with penny stocks, the app lets investors buy shares of “pricey” stocks like Tesla (NASDAQ:TSLA) without having to pay for a full share right away.

And data shows that Robinhood investors have a healthier risk appetite than other investors. And that appetite has increased since the start of the pandemic. This lines up to the time when investors had more time on their hands.

With that said, many Robinhood investors have been, quite frankly, using the app to engage in a legal form of gambling. I say this because trying to dive quickly in and out of the market in an attempt to capture a profit may work. But historically, it’s a path to ruin.

However there are two sides to every story. And the same is true of Robinhood investors. There are many examples of where these investors have gotten it right. In this presentation, we’ll show you eight examples of stocks that the market and Robinhood investors have gotten exactly right.

View the "8 Stocks That Robinhood Investors Got Right".

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