The gold bull market is in full swing, yet surprisingly few investors seem to be paying attention. There are more doubters these days, with traders predicting a sharp reversal. However, those who keep a close eye on the market know that the price of gold has been rising steadily over the past two years. During this period, gold has even outperformed the S&P 500, returning almost 60%.
With significant geopolitical uncertainty and central banks around the world increasing their gold reserves, the metal’s appeal as a hedge against uncertainty remains strong. For investors looking to capitalize on this rally, mining stocks are an attractive option, especially those with a Zacks Rank #1 (Strong Buy) judgement. Below we highlight the three highest ranked mining stocks: Idaho Strategic Resources ((IDR – Free report) ), Barrick Gold ((GOLD – Free report) ) And I am gold ((IAG – Free report) ), which are well positioned to benefit from the continued rise in gold prices.
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Idaho Strategic Resources: momentum and earnings growth
Idaho Strategic Resources is a small-cap mining company that has struggled, with its stock price up as much as 135% this year. Even more compelling is the trend in recent earnings revisions: Over the past two months, earnings estimates for fiscal 2024 have risen 167%. This shows that analysts have dramatically increased their expectations for the company’s future profitability, reflecting optimism about its growth prospects.
The company has also shown exceptional long-term performance, with its share price up 550% over the past five years. Despite this impressive run, Idaho Strategic Resources is still trading at an attractive valuation. The stock currently trades at a one-year forward upside of 20.7x, which is lower than the five-year median of 27x, indicating potential value for investors. This multiple is also just slightly above the industry average of 18.4x, making IDR an attractive mix of growth and reasonable valuation.
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Barrick Gold: a leading player with strong fundamentals
Barrick Gold is one of the best-known names in the mining sector, offering investors exposure to gold through a well-established and globally diversified company. Immediately Zacks Rank #1 (Strong Buy)Barrick has consistently demonstrated solid financial performance, making it a top choice for investors seeking stability alongside the growth potential of rising gold prices.
Earnings estimates have skyrocketed over the past two months, with FY24 estimates up 8.6% and FY25 estimates up 11.1%. Earnings at Barrick Gold are expected to grow an impressive 33% annually over the next three to five years, while the company remains reasonably valued. With forward earnings of 16.1x, it has a PEG ratio of just 0.5.
In addition to earnings growth forecasts, Barrick’s financial health is solid, with strong cash flow generation and approximately $4 billion in cash reserves. The company has returned about $700 million to shareholders through dividends and has launched a $1 billion share buyback program. Barrick’s efforts to reduce debt have also been effective, with its debt-to-capital ratio improving to below the industry average.
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Iamgold: huge potential
Iamgold is a mid-sized gold mining company with operations in North America, South America and West Africa, known for its diverse production portfolio and focus on sustainable mining practices. The company is currently developing its flagship Côté Gold project in Ontario, which will become one of the largest gold mines in North America and significantly increase its production capabilities.
Iamgold is experiencing a strong upward trend in earnings revisions, underscoring analysts’ growing confidence about future performance. Over the past two months, FY24 earnings estimates have been revised upward by 45.5%, and FY25 by 24.1%. Revenue growth forecasts are equally impressive: FY24 growth is expected to be 56.7% and FY25 growth is expected to be 20.5%. Despite these bullish projections, IAG is trading at a one-year earnings multiple of just 10.9x, significantly below the industry average of 18.4x and well below the five-year median of 16.4x, suggesting the company offers attractive value at current levels.
A key differentiator for Iamgold is its continued focus on developing its flagship Côté Gold project in Ontario, Canada. Côté Gold is expected to be one of the largest gold mines in North America and has the potential to significantly increase IAG’s production capacity, with a target of commercial production in early 2025.
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Should Investors Buy Gold Mining Stocks?
The ongoing gold rally shows no signs of slowing down, and mining stocks like Idaho Strategic Resources, Barrick Gold and Iamgold offer investors clear opportunities to profit from this trend. Gold typically provides an uncorrelated source of return, often moving independently of traditional assets such as stocks and bonds, which helps diversify a portfolio.
Furthermore, as a hedge against economic uncertainty, currency devaluation and geopolitical risks, gold remains a valuable asset during periods of market volatility and inflation, making these mining stocks an attractive play for investors.