3 gold stocks to consider as prices of the yellow metal rise

The price of gold has approached $2,000 per ounce. This can benefit from gold stocks.

Here, I’ll highlight three gold stocks that I think are worth watching right now. I think this company is likely to benefit from higher gold prices.

The golden giant

The first is Newmont Company (NYSE: NEM), which is listed in the US. The world’s largest gold miner, has operations in North and South America, Australia and Africa.

Last year, Newmont produced 6m ounces of gold. And for 2023, it has given guidance between 5.7m and 6.3m ounces. All-in sustaining costs (a widely used cost metric in the gold mining industry) are expected to be between $1,150 and $1,250 per ounce this year. This means that the company should do well when the price is above $2,000 per ounce.

It is worth noting that in February, Newmont tried to acquire Australia’s largest gold producer Newcrest Mining for $17bn. Offer rejected. However, the two companies are now reportedly in talks to reach an agreement. If a deal can be struck, it will surpass Newmont’s lead as the world’s largest producer.

Newmont stock currently has a price-to-earnings (P/E) ratio of around 23 and offers a prospective dividend yield of around 3.2%. I see both the price and yield as relatively attractive, given the size and scale of the company.

Buy inside

The next stock I want to focus on Centamine (LSE: CEY), which is listed on London Stock Exchange. It mainly operates in Egypt at the Sukari Gold Mine.

For 2023, Centamin says it expects to produce between 450,000 and 480,000 ounces of gold. All-in sustaining costs are expected to range from $1,250-$1,400 per ounce of gold sold. The cost is much lower than the current price.

One thing to highlight here is that Centamin’s CEO and CFO have bought the company’s shares in the past month. This is very encouraging. These top-level directors tend to have a good understanding of the company’s prospects.

The expected P/E ratio here is about 13, while the yield is close to 4%. I see some value in the stock at that level.

Cheap gold stocks

Finally, in a small space, I think Pan African Resources (LSE: PAF) is looking interesting right now. It is a gold miner with operations in South Africa.

For the year ending June 30, Pan African Resources expects to produce 195,000-205,000 ounces of gold. It does not provide cost guidance to maintain all year. However, for the six-month period until the end of 2022, the cost is $1,291 per ounce – much lower than the current price.

One reason to be bullish here is that the stock is currently undervalued. Currently, the expected P/E ratio is only 5.5. At that valuation, I see room for share price appreciation.

Risk sharing is higher

It should be noted that gold stocks are a higher risk investment. Gold mining is a complex business. There are so many things that can go wrong. As a result, gold stocks do not always rise when commodity prices rise.

My advice to investors looking at gold stocks is to own a lot of other stocks as well for diversification.