7 Most Undervalued Canadian Stocks To Buy According To Analysts

02. TRX Gold Corporation (NYSE:TRX)

Upside Potential: 254%

Forward Price to Earnings (P/E) Ratio: 6.16 

Number of Hedge Fund Holders: 2

TRX Gold Corporation (NYSE:TRX), based in Oakville, Canada, is engaged in the exploration, development, and production of gold properties in the United Republic of Tanzania. The company’s primary asset is the Buckreef Gold Project, which includes a Special Mining License covering 16.04 square kilometers and 12 Prospecting Licenses spanning 98.19 square kilometers in north-central Tanzania. Formerly known as Tanzanian Gold Corporation, the company rebranded to TRX Gold Corporation (NYSE:TRX) in May 2022 to align with its expanded operations and strategic focus.

In Q3 2024, TRX Gold Corporation (NYSE:TRX) delivered a strong financial performance, showcasing significant revenue growth and improved gold production. The company reported revenues of over $10 million for the quarter, contributing to a year-to-date figure of around $30 million. The gross profit margin for Q3 2024 stood at approximately 43%, demonstrating robust operational efficiency. Year-to-date gross margins also remained strong at over 40%, highlighting TRX Gold’s ability to manage costs effectively despite increased production activities.

A key highlight from the earnings call was TRX Gold Corporation (NYSE:TRX) ability to ramp up production to nearly 1,900 tonnes per day, a substantial 116% increase compared to the previous quarter. This surge in production capacity resulted from the successful commissioning of the company’s 2,000 tonnes-per-day processing plant, which was expanded on time and within budget. The expansion was funded entirely through internally generated cash flow, preventing any dilution of shareholder value.

The company’s liquidity position remains healthy, with just under $8 million in cash and a debt-free balance sheet. This solid financial footing enables TRX Gold to explore further operational expansions and pursue strategic investments to optimize gold recovery rates. TRX Gold Corporation (NYSE:TRX) also benefits from favorable realized gold prices, with year-to-date prices averaging $2,300 per ounce and recent sales fetching as high as $2,460 per ounce.

Despite the rising operating costs due to higher mining expenses, TRX Gold Corporation (NYSE:TRX) remains focused on optimizing throughput and recovery rates to enhance profitability. The company’s transition from oxides to sulfide ores presents some challenges, but ongoing evaluations and potential investments in advanced milling technology are expected to mitigate these issues. With strong financial performance, operational expansion, and a solid liquidity position, TRX Gold Corporation (NYSE:TRX) is well-positioned for future growth, making it one of the most undervalued Canadian stocks to consider for investment according to analysts.