Gold Mining Stock Outlook - Sept. 2017

While demand will remain strong, supply of this precious metal has already attained peak levels as per reports. Despite major miners improving cash flow and cutting debt in the last few years, project capital expenditure remains at multi-year lows.

There are a few new projects and expansions anticipated to commence production this year. Further, those in the near-term pipeline are generally fairly modest in scale. Per the World Gold Council, the project pipeline will experience a small pick-up in 2017 and 2018 before global mine production levels begin to decline in 2019. The combination of lower mined gold supply and higher demand could eventually propel the prices north.

How to Play the Industry

Despite a low ranking now, improved performance compared with the S&P 500, low valuation and earnings growth expectation makes a good investment case for the gold mining industry. Investors can consider the following gold stocks that are backed by a solid Zacks Rank.

Golden Star Resources Ltd. (GSS - Free Report) , Randgold Resources Ltd. (GOLD - Free Report) and Kinross Gold Corp. (KGC - Free Report) can be solid additions to one’s portfolio. Golden Star Resources has an expected earnings growth of 50% for fiscal 2017 and 183.33% for fiscal 2018. The stock currently sports a Zacks Rank #1 (Strong Buy).

Randgold Resources carries a Zacks Rank #2 (Buy) and has an expected earnings growth of 26% for fiscal 2017 and 27% for fiscal 2018. Kinross Gold, another Zacks Rank #2 stock, has an expected earnings growth of 14% for fiscal 2017 and 59% for fiscal 2018.

However, we suggest staying away from or getting rid of Zacks Rank #5 (Strong Sell) stocks such as Yamana Gold Inc. (AUY - Free Report) and Pretium Resources Inc. (PVG - Free Report) . These stocks have witnessed downward revision in their estimates.

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You can see the complete list of today’s Zacks #1 Rank stocks here.

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