10 Worst Middle East and Africa Stocks To Buy According to Short Sellers

7. DRDGOLD (NYSE:DRD)  

Short Interest as % of Shares Outstanding: 1.61%

Number of Hedge Fund Investors in Q2 2024: 7

DRDGOLD (NYSE:DRD) is a gold mining company based in South Africa. The company specializes in extracting gold from surface tailings in the Witwatersrand Basin, one of the largest gold reserves in South Africa. The company operates through two primary divisions: the Ergo segment, accounting for around 60% of its total mineral reserves and 75% of its mineral resources, and the Far West Gold Recoveries (FWGR) segment. DRDGOLD (NYSE:DRD) holds approximately 5.8 million ounces in mineral reserves and 9.6 million ounces in mineral resources.

In the first half of 2024, DRDGOLD (NYSE:DRD) saw a 6.3% year-over-year drop in gold production, totaling 81,888 ounces. This contributed to a 10% rise in all-in costs, which reached $1,575 per ounce, which is high compared to industry standards. However, strong gold prices helped increase the company’s operating margin to 30.2%, with earnings growing by 10.1% to $30.8 million.

DRDGOLD (NYSE:DRD) is facing production difficulties due to delays in starting up two large sites, which were meant to replace older, exhausted ones. These delays were caused by slow approvals from authorities and problems with local communities. Both issues were resolved in  January. The company is now optimistic about producing around 90,000 ounces in the second half of FY24, with all-in costs expected to fall below $1,500 per ounce due to economies of scale and reduced energy costs from its solar plant. DRDGOLD (NYSE:DRD) remains on track to meet the lower end of its FY24 production guidance of 165,000 to 175,000 ounces. Looking forward, DRDGOLD (NYSE:DRD) stands to benefit from elevated gold prices, with forecasts from Citi and Goldman Sachs predicting peaks of $3,000/oz and $2,600/oz, respectively, in the coming months.

DRDGOLD (NYSE:DRD) is also expanding its Ergo and FWGR operations, with new feeders commissioned at the Ergo plant, and ongoing projects such as a 60 MW solar facility and enhanced processing capacity at the Driefontein Plant. DRDGOLD (NYSE:DRD) is committed to reinvesting $193.2 million in infrastructure.

DRDGOLD’s (NYSE:DRD) stock is trading at 12.76 times its earnings, a 21.23% discount to the sector median of 16.20. While 1.16% of the company’s shares are shorted, 7 hedge funds have maintained a bullish sentiment on the stock as of the second quarter with stakes worth $10.55 million. Renaissance Technologies is the largest shareholder in the company and holds stocks worth $6.90 million as of June 30. Industry analysts maintain a consensus Buy rating for the stock, with an average price target of $13.25, indicating a 28.84% upside potential from its current price.