Why this gold stock fell 15.2% in February but is attracting investors in March
Extending their journey south from January, the actions of Gold Yamana (NYSE: AUY) fell 13.9% last month, according to data from S&P Global Market Intelligence. Gold action, however, has started March on a relatively encouraging note, gaining nearly 7.2% so far, at the time of writing.
After peaking at around $ 1,950 an ounce in early January, gold prices began to decline steadily and lost nearly 11% at the end of February. Gold is considered a safe haven, which is why its price rose in 2020 when the COVID-19 pandemic rocked the world. Pessimism subsided in early 2021, starting with Joe Biden’s presidential victory that raised hopes for a fiscal stimulus. Gold prices fell further in February as COVID-19 vaccinations were rolled out and bond rates rose slightly and hurt the appeal of the yellow metal against bonds as a store of value .
None of this was good news for Yamana Gold, who makes more money when the price of gold rises. In fact, investors ditched gold stocks last month and flocked to other hot sectors that were poised to take advantage of an economic recovery.
Image source: Getty Images.
Yamana’s fourth-quarter and full-year figures released on February 11 failed to boost investor morale. Its all-inclusive sustaining cost (AISC) of $ 1,080 per ounce of gold in 2020 was at the high end of the industry spectrum, and its other costs have increased as COVID-19 restrictions in Argentina hit operations at Cerro Moro. This was perhaps one of the most disappointing lessons from the Yamana Profits Report, as Cerro Moro is its cheapest and most important mine. In addition, Yamana’s gold production outlook for 2021 and 2022 was also lower than its initial forecast thanks to the drop in gold prices.
So, while gold prices hit their lowest level in nine months at the time of writing following an unusually strong employment report in February, why is Yamana Gold stock picking up? it in March? Investors may see it as an opportunity, given Yamana’s outlook.
The miner increased its dividend by 50% in the fourth quarter and forecasts a 7.4% drop in AISC in 2021 and steady growth in gold production in the years to come. It also began construction of the Odyssey project at the Canadian Malartic mine, which it jointly owns with Agnico Eagle Mines. There’s a lot to like here, which may have fueled investor interest in the stock.
10 stocks we prefer over Yamana Gold
When investment geniuses David and Tom Gardner have stock advice, it can pay off to listen. After all, the newsletter they’ve been running for over a decade, Motley Fool Equity Advisor, has tripled the market. *
David and Tom just revealed what they think are the top ten stocks investors can buy right now … and Yamana Gold was not one of them! That’s right – they think these 10 stocks are even better buys.
See the 10 actions
* The portfolio advisor returns on February 24, 2021
Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.