Barrick Gold Stocks: Should You Buy Now?
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Barrel gold (TSX: ABX) (NYSE: GOLD) is down 20% in 2021 and down 35% in the past 12 months. The poor performance of the gold mining sector as the TSX Index hit records, some contrarian investors are wondering if now is the right time to buy Barrick Gold and other mining stocks.
Barrick Gold reported stable results for the second quarter of 2021, despite a severe blow from a mechanical processing plant failure at its Carlin site that impacted production for the quarter. The company had gold production of 1.041 million ounces in the second quarter of 2021, up from 1.149 million ounces in the same period last year. Nonetheless, Barrick Gold says it remains on track to meet its 2021 forecast.
Adjusted net income for the quarter was US $ 513 million, or US $ 0.29 per share, compared to US $ 415 million, or US $ 0.23 per share, for the same period in last year. Rising gold prices helped offset the drop in production. The realized gold price in the second quarter of 2021 was US $ 1,820 per ounce in the quarter, compared to US $ 1,725 in the second quarter of last year and all-in sustaining costs (AISC) were of US $ 1,087 per ounce, slightly above the AISC of US $ 1,031 reported for the second quarter of 2020.
Mining is a machine intensive business, and sometimes things get broken. Investors should look past the short-term setback when valuing the stock.
Barrick Gold also has significant copper operations which help differentiate the stock from its gold mining peers. The market may not fully appreciate the value of trading in copper at this time. Copper is currently trading at around US $ 4.40 a pound. That’s against US $ 2 in March 2020.
Barrick Gold continues to invest in exploration and development with the goal of expanding its 10-year, resource-driven plans to 15 or even 20 years. The gold mining industry as a whole benefits from higher prices rather than investing to replace high quality reserves. This means that a gold shortage could arise in the years to come and companies with the best reserve base are expected to outperform in the long run.
Barrick Gold says the success of its ongoing explorations of brownfields in North America and Africa will more than make up for depletion of reserves in 2021. In addition, greenfield operations are targeting new discoveries in the broader portfolio of former Barrick assets, including promising locations in Egypt, Guyana and Japan. , Senegal and Tanzania.
Barrick Gold ended the second quarter of 2021 with US $ 5 billion in cash. This gives the company good flexibility to make strategic investments for its future growth. Barrick Gold also rewards shareholders. The board has tripled the dividend over the past three years at an annualized rate of US $ 0.36 per share. Investors could see another big payout hike before the end of the year. Additionally, Barrick Gold declared a return of capital of US $ 750 million to shareholders in 2021. This equates to approximately US $ 0.42 per share on top of the dividend.
Should You Buy Barrick Gold Stock Today?
Barrick Gold is making a lot of money at current gold prices. The company is investing for the future and gold may only be in the early stages of a long-term rally. Volatility is to be expected, but Barrick Gold stock currently appears undervalued.
If you’re positive about gold for the next five years, this stock should be on your buy list. The price of gold could easily retest US $ 2,000 an ounce by the end of 2022. Barrick Gold is currently trading around $ 25 a share on the TSX index. A return to the top of $ 40 in 2020 by the end of next year wouldn’t be a surprise.