Speculating on gold prices is one of the more popular areas of comex. On the one hand, it's a fairly simple case of supply and demand. On the other, precisely what drives that demand is not so clear. As such, it seems as though investing in gold mining stocks, an industry that relies heavily on the fickle cost of gold, would not be a wise investment.
However, there are some gold mining companies that have the sort of size and structure to make them a potentially promising investment. Companies with strong margins and solid growth projections might have the sort of strong business base to ride out the ups and downs of the gold market and maintain profitability in the long term. What's more, according to Galmarley.com, the remaining gold left in the earth is only 40 percent of what's currently above ground. This being the case, it's not unreasonable to believe that, over a long enough period of time, global demand for gold will begin to increasingly outpace supply, resulting in higher prices. Even if this is the case, gold prices will most likely continue to be subject to any number of short-term fluctuations, but there's still ample reason to expect prices to trend upwards in the long term.
So, here are three gold mining stocks that appear to have the sort of growth projections, margins, and valuations to sustain themselves through good gold markets and bad. Each of these three companies has projected EPS growth of 35 percent annually over the next five years, have operating margins over 30 percent, have profit margins over 20 percent, and a PEG of under one.
All told, these sorts of bullish valuations and projections could point towards companies that are poised to profit in the short term, thrive in the long term, and ride out the ups and downs in the meantime. While there's no guarantee that these companies will find the profits they expect, they could still have the potential to be strong investments.
Barrick Gold Corporation (ABX)
Market Cap: $45.65 billion PEG: 0.26 Projected EPS Growth Next Five Years: 39.47 percent Operating Margin: 48.36 percent Profit Margin: 31.70 percent
The Toronto, ON-based Barrick is the world's largest gold producer, with operating gold mines in North America, South America, and the Australia Pacific region. It also holds a 73.9 percent interest in African Barrick Gold (ABGLF), which operates gold interests in Africa.
Randgold Resources (GOLD)
Market Cap: $10.22 billion PEG: 0.59 Projected EPS Growth Next Five Years: 45.70 percent Operating Margin: 43.27 percent Profit Margin: 38.46 percent
Randgold is a Jersey-based company with gold operations primarily in Mali as well as other locations in West and Central Africa.
AngloGold Ashanti Limited (AU)
Market Cap: $15.17 billion PEG: 0.16 Projected EPS Growth Next Five Years: 64.90 percent Operating Margin: 33.52 percent Profit Margin: 24.32 percent
This South African gold-mining company with 20 operations in 10 countries across four continents.
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