After bottoming in late 2015 gold vs. the U.S. Dollar has stair-stepped higher. The precious metal is now at a support level right around $1,200. Gold prices are down nearly 8% year-to-date (YTD), as of this writing. As the underlying value of gold rebounds, mining companies will follow suit, as the industry largely sees increase in reserve valuations. Here are a few companies that are particularly interesting in an effort to play the gold rebound:
Gold Resource Corporation (NYSE: GORO) has a specific mandate to seek low operating costs and concentrate on maintaining a positive cash flow. The company demonstrates their focus on cash flow by paying a small dividend to investors. The company’s return-on-assets, coming in at 5.8%, is one of the highest in the industry for a small-cap stock.
GORO also maintains one of the highest profit margins in the group. When many companies have not been profitable, Gold Resource currently has a 6.4% profit margin. As the price of gold rises the company will be able to leverage their operational execution.
While Gold Resource has mines in Mexico and Nevada, Golden Star Resources, Ltd. (NYSE: GSS) operates two gold mines gold Ghana. Golden Star also operates on a low-cost, high-grade gold model. And, as with Gold Resource, the company demonstrates its operational excellence in its financial numbers.
Golden Star Resources has a trailing-twelve-month return on equity (ROE) of over 176%, one of the highest in the industry. The company has a profit margin of 6%, and has grown earnings this year over 170%.
La Mancha holding, a Luxembourg private gold investment company recently purchased a 30% interest in the company in a private placement. The investment was accretive to Golden Star shareholders, as La Mancha paid above the current trading price of the stock for the investment. This is a great sign for investors, that a third party specialty precious metals
Finally, let’s take a look at SSR Mining, Inc. (NASDAQ: SSRM). SSR Mining operates mines in North and South America. You need look no further than SSR’s profit margin, over 12%, to recognize the company has been operating at a high level.
The stock is up over 30% the first half of 2018, and has held steady as the underlying commodity has pulled back in the last few weeks. The company has been increasing production and operational capacity, while at the same time maintaining their impressive profit margins.
The company has also maintained a high cash position, $4.30 per share, to weather any storm, or have the flexibility to take advantage of a new opportunity. These factors make SSR Mining a stable company with a lot of room for growth as the yellow metal rises.
These 3 smallcap gold stocks, Golden Resource, Golden Star, and SSR Mining, are demonstrating operational excellence, a key factor in choosing a precious metals stock. Performing at such a high level allows these companies to take advantage of an upturn in the price of gold, and provide an 18 carat return to investors.
Disclaimer: The author and Spotlight Growth has no positions in any of the stocks mentioned in this article. Nor does either party currently have any relationship, or any other conflicts of interest, with any of the companies mentioned in this article. This content is meant for informational and entertainment purposes only and should not be meant as a recommendation to buy or sell any securities. Please visit a licensed financial representative to determine what investments are right for you.
Article By: Steven Adams