1 cheap gold stock to buy in October 2021
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Talk about cheap gold stocks … Gold Equinox (TSX: EQX) is more than out of favor. Investors outright hate stocks right now! But not insiders. Insiders hold around 8.5% of the gold stock, which is rare. One of its peers owns 1.4% of insiders. And some insiders own as little as nothing shares in the gold mines they run.
Equinox Gold is roughly at the bottom of the pack when it comes to recent stock price performance relative to its peers. The gold stock is absolutely depressed right now. However, this appears to be a technical basis, which could be the buy signal for price gains for patient investors. Since the right parts snap into place, this could be of great benefit.
Equinox Gold could be a dark horse
Equinox Gold stock could be the dark horse among its mid-cap peers. The gold miner has sold significantly by around 44% since September 2020. Apparently that was when it suspended mining activities at Los Filos, its mine in Mexico, due to an illegal roadblock by members of a neighboring community. Los Filos is one of seven operating mines at Equinox Gold, and it accounts for a significant proportion of production – around 20%.
The decline in gold prices is a lesser factor in the decline in gold stocks. The spot price of gold hit US $ 1,992 per ounce in September 2020 and fell about 12% to US $ 1,760. That said, gold prices are still significantly higher than the levels of US $ 1,067 to US $ 1,375 five years ago.
Shareholders would be happy to hear that the Los Filos mine issue has been resolved at the end of July 2021. The mine has resumed operations. One of its growth projects includes the expansion of the Los Filos mine, which would extend the life of the mine.
This gold stock has massive growth ahead!
Notably, Equinox Gold has the best expected production growth among its peers of similar size. By 2024, management estimates production growth of 83%. He has four ongoing growth projects to help him achieve top growth.
One growth project is the Greenstone Project in Ontario, which is expected to add approximately 240,000 ounces per year to Equinox’s production. This project alone is significant given that Equinox’s most updated 2021 forecast is production of 560,000 to 625,000 ounces. That is, Greenstone can add around 40% of production per year. One growth project that is expected to go live even sooner is the Santa Luz mine, a former mine that could start adding around 100,000 ounces per year as early as the first quarter of 2022.
It is important to note that gold stock is very cheap today. At $ 9.51 per share, it trades at a discount of around 40% from its net asset value. This valuation is, once again, close to the bottom of the pack. The idea is that, as Equinox’s growth plans come into operation, it should trade at a higher valuation that aligns more with its peers. The stock could potentially double over the next few years.