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These 2 Gold Miners Are Still a Buy Despite Sector Weakness

Gold prices are inversely related to the U.S. dollar. Therefore, a strengthening dollar has recently led to a decline in gold prices. While declining gold prices affect gold mining stocks, Centerra Gold (CGAU) and Jaguar Mining (JAGGF) are still well-positioned to perform well. Despite the sector's weakness, these stocks have been rated a Buy in our proprietary rating system. Read on…

The U.S. dollar has been one of the major beneficiaries of macroeconomic and geopolitical headwinds. The dollar has strengthened steadily against the Euro, British Pound, and the Yen amid the uncertainties surrounding the stock market and economy.

Since gold and the dollar have an inverse relationship, gold has been under pressure due to the strengthening U.S. dollar. Investors are avoiding risky investments and parking up their money in the U.S. dollar, which they perceive as more secure in uncertain times.

While the appeal of gold as a safe-haven asset has not diminished in this climate, the hawkish Fed, higher real rates, and a strong dollar are weighing on bullion. And since the revenues of gold miners are tied to gold prices, many gold miners are expected to remain under pressure.

However, quality gold mining stocks Centerra Gold Inc. (CGAU) and Jaguar Mining Inc. (JAGGF) are well-positioned to survive the sector’s weakness. So, it could be wise to add these stocks to your portfolio. These stocks are rated Buy in our proprietary POWR Ratings system.

Centerra Gold Inc. (CGAU)

Headquartered in Toronto, Canada, Centerra Gold Inc. (CGAU) is a gold mining company focused on operating, developing, exploring, and acquiring gold properties in North America, Turkey, and other markets worldwide. The company explores gold, copper, and molybdenum deposits. It operates two mines: the Mount Milligan Mine in British Columbia, Canada, and the Oksut Mine in Turkey.

On February 28, 2022, CGAU announced the completion of its previously announced acquisition of Gemfield Resources LLC, owner of the Goldfield District Project, from Waterton, Nevada Splitter, LLC.

CGAU’s revenue increased 30.5% year-over-year to $295.22 million. The company’s adjusted net earnings from continuing operations increased 100% year-over-year to $56.40 million. Also, its adjusted net earnings from continuing operations per common share came in at $0.19, representing an increase of 90% year-over-year.

Analysts expect CGAU’s EPS for the quarter ending September 30, 2022, to increase 233.3% year-over-year to $0.40. Its revenue for fiscal 2022 is expected to increase 30.7% year-over-year to $1.18 billion. Over the past year, the stock has lost 20.6% to close the last trading session at $6.24.

CGAU's overall B rating equates to a Buy in our POWR Ratings system. The POWR Ratings are calculated by accounting for 118 distinct factors, with each factor weighted to an optimal degree.

It has an A grade for Quality and a B for Growth and Value. It is ranked first out of 34 stocks in the Miners – Gold industry. Click here to see the other ratings of CGAU for Momentum, Stability, and Sentiment.

Jaguar Mining Inc. (JAGGF)

Headquartered in Toronto, Canada, JAGGF is a junior gold mining company that acquires, explores, develops, and operates gold-producing properties in Brazil. It holds principal assets in the iron quadrangle in Minas Gerais, Brazil.

On June 10, 2022, JAGGF announced a notice for a normal course issuer bid to purchase for cancellation up to 3,623,640 common shares in the capital of the company in total. The company intends to enhance long-term shareholder value by buying and canceling common shares at a discount to their underlying value.

For the fiscal first quarter, ended March 31, 2022, JAGGF’s free cash flow increased 1,245.2% year-over-year to $2.65 million. Its cash generated from operating activities came in at $7.71 million, representing an increase of 19.2% year-over-year.

For fiscal 2023, JAGGF’s EPS and revenue are expected to increase 430% and 6.6% year-over-year to $0.27 and $157.63 million, respectively. Over the past year, the stock has lost 50.2% to close the last trading session at $2.15.

JAGGF’s POWR Ratings reflect solid prospects. The stock has an overall B rating, equating to a Buy in our proprietary rating system.

It has an A grade for Quality and a B for Value and Momentum. Within the same industry, it is ranked #3. To see the other ratings of JAGGF for Growth, Stability, and Sentiment, click here.

CGAU shares were trading at $6.40 per share on Thursday morning, up $0.16 (+2.56%). Year-to-date, CGAU has declined -15.65%, versus a -17.89% rise in the benchmark S&P 500 index during the same period.

About the Author: Dipanjan Banchur

Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.


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