Gold is facing headwinds from a strong U.S. dollar and the expectations of aggressive interest rate hikes. Therefore, we believe gold stocks Buenaventura Mining (BVN), Hycroft Mining (HYMC), and GoldMining (GLDG) are best avoided now, given their bleak fundamentals. Read on….
Gold has had a tough summer. The yellow metal lost 2% month-over-month to $1,715.90/oz in August, which is its fifth consecutive monthly decline. On the other hand, its rival asset, the U.S. dollar, has been on a tear lately. Many professional investors don’t expect the greenback to ease off anytime soon.
Looking ahead, gold is expected to remain under pressure if central banks continue on their path to hike interest rates aggressively. The markets are expecting another 75-basis point rate hike this week which is expected to create a short-term weakness for the metal, with an even deeper decline not ruled out by analysts.
Given this backdrop, the fundamentally weak gold stocks Buenaventura Mining Company Inc. (BVN), Hycroft Mining Holding Corporation (HYMC), and GoldMining Inc. (GLDG) might be best avoided heading into the fourth quarter.
Buenaventura Mining Company Inc. (BVN)
Based in Lima, Peru, BVN explores, mines, processes, and trades precious and base metals. The company primarily explores gold, silver, lead, zinc, and copper metals.
For the fiscal second quarter of 2022, BVN’s total revenues decreased 37.7% year-over-year to $150.10 million. Net income declined 206.4% from the prior-year quarter to a negative $39.90 million. EPS decreased 206.7% from the same period the prior year to a negative $0.16.
The consensus revenue estimate of $769.44 million for the fiscal year 2022 indicates a 14.5% year-over-year decrease.
The stock has declined 15.3% year-to-date and 39.4% over the past six months to close its last trading session at $6.20.
BVN’s POWR Ratings reflect this bleak outlook. The stock has an overall D rating, equating to a Sell in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
BVN has a Sentiment grade of F and a Quality grade of D. In the 34-stock Miners – Gold industry, BVN is ranked #29. The industry is rated F.
Click here to see the additional POWR Ratings for BVN (Growth, Value, Momentum, and Stability).
Hycroft Mining Holding Corporation (HYMC)
HYMC operates as a gold and silver development company in the United States. The company primarily holds interests in the Hycroft mine in the state of Nevada.
On July 18, HYMC announced a large exploration program at the Hycroft Mine in nearly a decade, following higher-grade opportunities identified in the 2021 program. However, the gains from new explorations might take some time to materialize.
HYMC’s revenues decreased 89.4% year-over-year to $3.83 million for the fiscal quarter that ended June 30. Net loss and loss from operations rose 6.6% and 124% from the prior-year period to $8.98 million and $8.49 million.
Street revenue estimate for the fiscal year 2022 of $2.70 million reflects a decline of 97.6% from the prior year.
Over the past year, the stock has declined 55.4% to close its last trading session at $0.76. It has declined 43.8% over the past six months.
It’s no surprise that HYMC has an overall F rating, which translates to Strong Sell in our POWR Ratings system. The stock also has an F grade for Stability, Sentiment, and Stability and a D for Value. It is ranked last in the Miners – Gold industry.
To see the additional POWR Ratings for Growth and Momentum for HYMC, click here.
GoldMining Inc. (GLDG)
GLDG operates as a mineral exploration company, acquiring, exploring, and developing gold assets in the Americas. The company functions in a diversified portfolio of resource-stage gold and gold-copper projects. It is headquartered in Vancouver, Canada.
On July 5, GLDG announced the closing of the previously announced grant of an option on the company’s Almaden Project in Idaho to a subsidiary of NevGold Corp. and its strategic investment in NevGold.
For the fiscal quarter that ended May 31, GLDG’s operating income declined 103% year-over-year to a negative CAD3.36 million ($2.53 million). Net income for the period and income per share came in at a negative CAD2.86 million ($2.16 million) and a negative CAD0.02, down 102.7% and 102.9% from the prior-year period.
GLDG’s EPS is expected to come in at a negative $0.01 for the quarter that ended August 2022.
GLDG’s shares have declined 26.2% over the past year and 47.2% over the past six months to close its last trading session at $0.93.
GLDG’s bleak prospects are reflected in its POWR Ratings. The stock has an overall D rating, equating to a Sell in our proprietary rating system. GLDG has a Value and Quality grade of F. It is ranked #30 in the same industry.
In addition to the POWR Rating grades we’ve stated above, one can see GLDG ratings for Growth, Momentum, Stability, and Sentiment here.
BVN shares rose $0.09 (+1.45%) in premarket trading Monday. Year-to-date, BVN has declined -13.51%, versus a -18.70% rise in the benchmark S&P 500 index during the same period.
About the Author: Anushka Dutta
Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research.