In this piece, we will take a look at eight cheap gold stocks to buy according to hedge funds.
Gold has been on an impressive rally in 2024, positioning itself as one of the best-performing assets of the year. This surge is largely driven by various macroeconomic factors, including central bank policies and geopolitical uncertainty. According to a report by Reuters, major banks expect the gold bull run to extend into 2025 due to a combination of strong physical demand from China and substantial inflows into exchange-traded funds (ETFs). J.P. Morgan analysts noted that the revival of large ETF inflows, which had been absent since April 2022, is crucial for sustaining the rally. The U.S. Federal Reserve’s recent decision to initiate a rate-cutting cycle is also expected to provide additional momentum for gold prices.
So far this year, gold has gained over 27%, or nearly $570 per ounce, and recently hit a record high of $2,639.95 per ounce. This marks its highest annual rise since 2010 and a stark outperformance compared to major stock indices. UBS analysts believe that despite these gains, gold has more room to grow over the next 6 to 12 months. They attribute this optimism to the Fed’s ongoing interest rate cuts and the upcoming U.S. presidential election, which could increase market volatility and further drive investors toward safe-haven assets like gold.
A second report from Goldman Sachs Research supports this bullish outlook, forecasting gold prices to reach $2,700 by early 2025. Strategists point to several factors that could push the precious metal to new heights. Firstly, central bank purchases of gold have accelerated since Russia’s invasion of Ukraine, as these institutions seek to diversify away from the U.S. dollar and mitigate the risks posed by potential U.S. financial sanctions. The bank also highlights that gold is currently their preferred near-term long position due to its potential as a hedge against financial and geopolitical risks.
In addition, strategists believe that further Fed rate cuts will likely bring Western investors back into the gold market, which has seen relatively lower participation from this group during the recent rally. Another key driver could be geopolitical shocks, such as additional tariffs or heightened debt concerns in the United States. Should the U.S. debt burden continue to rise, it could lead to increased credit-default swap spreads, enhancing gold’s appeal as a safe-haven asset.
The strong outlook for gold is echoed by various financial institutions, with several projecting prices to continue climbing over the next few years. ANZ anticipates gold to reach $2,805 by the end of 2025, while BofA sees the potential for prices to touch $3,000 per ounce. Similarly, Macquarie expects gold to hit a peak of $2,600 per ounce in Q1 2025, with a possible spike toward $3,000. Citi Research’s baseline projection ranges between $2,800 and $3,000 per ounce by 2025.
Given these forecasts, investors are increasingly looking at gold as a reliable investment option in the current uncertain economic environment. The continued interest rate cuts by the U.S. Federal Reserve, coupled with strong physical demand and robust ETF inflows, create a favorable backdrop for further appreciation in gold prices. Consequently, several hedge funds have started accumulating positions in gold mining stocks, viewing them as a cost-effective way to gain exposure to the precious metal’s rally.
In this article, we explore eight cheap gold stocks to buy according to hedge funds. These stocks offer investors an opportunity to benefit from the anticipated gold bull market at relatively lower prices. With solid financials and potential for significant upside, these gold stocks could be attractive additions to any portfolio looking to capitalize on the ongoing surge in gold prices.
Our Methodology
For this article, we utilized the Finviz stock screener to identify stocks within the gold industry that have forward price-to-earnings (P/E) ratios below 15 as of September 29. From this initial list, we focused on eight stocks that are most favored by institutional investors. These stocks were then ranked in ascending order based on the number of hedge funds holding stakes in them as of Q2 2024.
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08. Galiano Gold Inc. (NYSE:GAU)
Number of Hedge Fund Holders: 7
Forward P/E Ratio as of September 29: 2.45
Galiano Gold Inc. (NYSE:GAU) is a Vancouver-based gold mining company that focuses on exploring and evaluating gold properties in Canada. Its flagship asset is the Asanko Gold Mine, which spans approximately 21,000 hectares in Ghana, West Africa. The company, formerly known as Asanko Gold Inc., changed its name to Galiano Gold Inc. (NYSE:GAU) in May 2020. As of the second quarter of 2024, the stock is held by 7 hedge funds, up from 5 in the previous quarter, showcasing increased institutional interest.
Galiano Gold Inc. (NYSE:GAU) second-quarter earnings report highlights the company’s strong financial performance. The company recorded an adjusted EBITDA of $120.3 million, a notable increase from $114.3 million in the first quarter of 2024. Galiano’s net income stood at $62.5 million, translating to earnings per share of $0.31. This compares to a net income of $65.4 million and earnings per share of $0.33 in the first quarter. The adjusted net profit rose to $63.4 million with adjusted earnings per share of $0.32, up from $58.4 million and earnings per share of $0.29 in Q1.
Operationally, Galiano Gold Inc. (NYSE:GAU) continued to execute its fleet renewal strategy, which includes selling older Panamax vessels at attractive prices to maintain a modern and efficient fleet. The company has locked in a solid time charter equivalent (TCE) rate for its Capesize and Panamax vessels, achieving rates of $28,000 per day and $15,700 per day, respectively. This robust performance has enabled Galiano to declare a dividend of $0.30 per share for Q2 2024.
From a financial perspective, Galiano Gold Inc. (NYSE:GAU) operating expenses remained relatively stable at $66.3 million compared to $62.6 million in Q1, despite increased drydocking activities. The company’s balance sheet is strong, with cash and cash equivalents of $103.1 million at the end of the quarter and $150 million in undrawn credit facilities. Additionally, Galiano Gold Inc. (NYSE:GAU) total debt decreased by approximately $33 million quarter-on-quarter, reflecting a conservative leverage strategy with a loan-to-value (LTV) ratio of around 34%. With its modernized fleet, solid cash flow, and a strong dividend yield, Galiano Gold Inc. (NYSE:GAU) presents an attractive investment opportunity for those seeking exposure to the gold sector at a relatively low price point.
07. DRDGOLD Limited (NYSE:DRD)
Number of Hedge Fund Holders: 7
Forward P/E Ratio as of September 29: 9.91
DRDGOLD Limited (NYSE:DRD) is a South African gold mining company engaged in the surface gold tailings retreatment business. With a history dating back to 1895, the company focuses on exploration, extraction, processing, and smelting of gold in the Witwatersrand Basin. A subsidiary of Sibanye Gold Limited, DRDGOLD Limited (NYSE:DRD) recovers gold from surface tailings in the Gauteng province, positioning itself as a key player in sustainable mining practices. As of Q2 2024, the company had 7 hedge fund holders, slightly lower than 8 holders in the previous quarter.
In its Q4 2024 earnings report, DRDGOLD Limited (NYSE:DRD) reported a strong financial performance, driven by a favorable gold price environment and efficient cost management. The company’s revenue increased by 14% year-over-year to over ZAR6 billion, while operating profit also saw a 14% jump to just over ZAR2 billion. The consistent upward trend in revenue and profit, despite production challenges, underscores DRDGOLD Limited (NYSE:DRD) ability to capitalize on favorable market conditions.
DRDGOLD Limited (NYSE:DRD) operational efficiency was highlighted by its achievement of 93% of its targeted gold production for the year, despite only reaching 84% of its throughput target. This was made possible through innovations and strategic management, ensuring the company remained competitive even with lower volumes. The company’s decision to invest in a 60-megawatt solar plant, coupled with 60 megawatts of battery storage, is expected to provide long-term energy cost savings and reduce dependency on traditional power sources.
The company’s commitment to sustainability was further demonstrated by a 58% decrease in water consumption, with 95% of the water used being recycled. This focus on sustainability not only reduces costs but also supports environmental regeneration efforts, which are integral to DRDGOLD’s long-term strategy.
From a valuation standpoint, DRDGOLD Limited (NYSE:DRD) offers a solid investment opportunity, backed by its robust balance sheet and consistent dividend payments. For the 17th consecutive year, the company paid a dividend, reflecting its strong cash flow and commitment to returning value to shareholders. With continued investments in infrastructure and innovation, DRDGOLD Limited (NYSE:DRD) is well-positioned for future growth, making it an attractive option among cheap gold stocks to buy according to hedge funds.
06. Centerra Gold Inc. (NYSE:CGAU)
Number of Hedge Fund Holders: 17
Forward P/E Ratio as of September 29: 10.67
Centerra Gold Inc. (NYSE:CGAU)is a mining company that explores and develops gold, copper, and molybdenum properties primarily in North America and Turkey. Its key assets include the 100%-owned Mount Milligan gold-copper mine in British Columbia, Canada, and the Öksüt gold mine in Turkey. As of Q2 2024, 17 hedge funds have positions in the stock, a slight increase from 16 in the previous quarter, indicating growing interest among institutional investors.
In its Q2 2024 earnings report, Centerra Gold Inc. (NYSE:CGAU) posted robust financial results, demonstrating its solid operational performance and ability to generate cash flows. The company reported adjusted net earnings of $47 million or $0.23 per share. Sales during the quarter included 83,258 ounces of gold and 11.7 million pounds of copper. The average realized price for gold was $2,097 per ounce, while copper fetched $3.79 per pound, reflecting favorable market conditions. Mount Milligan, a cornerstone asset for the company, produced over 38,000 ounces of gold and 13 million pounds of copper in Q2 2024. Although sales were lower than the previous quarter due to shipment timing, management expects stronger sales in the second half of the year, contributing approximately 60% of annual sales.
Operationally, Centerra Gold Inc. (NYSE:CGAU) has made strategic progress at Mount Milligan with the implementation of a site-wide optimization program and a preliminary economic assessment to extend the mine’s life. The company has also advanced permitting work at the Thompson Creek mine, which will support further mining activities. The Öksüt mine in Turkey produced over 51,000 ounces of gold in Q2 2024, with expectations for stronger production in the latter half of the year.
Centerra Gold Inc.’s (NYSE:CGAU) financial health remains strong, with a cash balance of $592 million, providing total liquidity of $992 million. The company continues to prioritize returning capital to shareholders through share buybacks and dividends, repurchasing 1.4 million shares for $10 million in Q2. With stable operations, strategic growth initiatives, and a commitment to shareholder returns, Centerra Gold Inc. (NYSE:CGAU) presents a compelling investment opportunity for those seeking exposure to the gold and copper sectors.
Heartland Value Fund stated the following regarding Centerra Gold Inc. (NYSE:CGAU) in its fourth quarter 2023 investor letter:
“Early last year, we highlighted Centerra Gold Inc. (NYSE:CGAU), a producer of gold and copper. With the recent pivot by the Federal Reserve to an easy money policy, we thought an update of this underappreciated hard asset was timely.
Centerra continues to make progress in increasing production while lowering costs. During the third quarter, the Oksut mine restarted, resulting in earnings per share of $0.20 while throwing off cash flow in excess of $100 million. Centerra remains debt free with cash soaring to $492 million, or $2.28 per share. A new management team is focused on optimizing a diverse portfolio of assets, including a strategy to boost the value of its molybdenum business for eventual sale. With an admirable balance sheet, Centerra has the resources to fund an aggressive exploration program in North America, pay a 3.3% dividend, and embark on an 8.5% repurchase of shares outstanding.
Trading below stated book value, approximately 60% of NAV, and less than 3X EV/EBITDA, we believe Centerra remains an outstanding small cap value.”
05. Equinox Gold Corp. (NYSE:EQX)
Number of Hedge Fund Holders: 17
Forward P/E Ratio as of September 29: 5.72
Equinox Gold Corp. (NYSE:EQX) is a Vancouver-based mining company involved in the exploration, acquisition, development, and operation of mineral properties throughout the Americas. The company focuses on gold and silver deposits, holding interests in mining properties across the United States, Mexico, Brazil, and Canada. Established in 2007, Equinox Gold Corp. (NYSE:EQX) was previously known as Trek Mining Inc. before changing its name in December 2017.
The stock has gained attention from hedge funds, with 17 hedge funds holding positions as of Q2 2024, up from 12 in the previous quarter. The company’s recent Q2 2024 earnings call highlights its operational resilience and solid financial performance despite challenges. Equinox Gold Corp. (NYSE:EQX) reported quarterly revenue of $269.43 million, slightly below expectations, but maintained a robust production of over 122,000 ounces of gold during the quarter. However, the company faced a minor setback, reporting an adjusted net loss of $6 million, equivalent to a loss of $0.01 per share.
One of the key developments in Q2 2024 was Equinox Gold Corp. (NYSE:EQX) acquisition of the remaining 40% ownership of its Greenstone mine, which is expected to be a significant catalyst for future growth. This acquisition consolidates ownership, enhances cash flows, and positions Greenstone as one of Canada’s largest open-pit gold mines, with substantial high-grade reserves. Equinox produced 16,000 ounces of gold at Greenstone in June, and production continued to ramp up with nearly 20,000 ounces produced in July. The company expects the mine to achieve commercial production by the end of Q3 2024.
Despite a temporary suspension of operations at its Fazenda mine in Brazil due to a safety incident, the company has continued to make progress in its overall production targets. Additionally, Equinox Gold Corp. (NYSE:EQX) ongoing expansion projects, such as the Castle Mountain Phase Two, are expected to enhance the company’s production profile over the long term.
Financially, Equinox Gold Corp. (NYSE:EQX) ended Q2 2024 with a solid cash flow from operations of $45 million and EBITDA of $510 million. The company’s recent corporate financing activities, including a $500 million term loan and a $299 million equity financing, demonstrate its robust capital management and strategic positioning to fund future growth initiatives.
04. Harmony Gold Mining Company Limited (NYSE:HMY)
Number of Hedge Fund Holders: 17
Forward P/E Ratio as of September 29: 8.75
Harmony Gold Mining Company Limited (NYSE:HMY) is a prominent player in the gold mining sector, boasting a significant presence in both South Africa and Papua New Guinea. With over 74 years of mining expertise, the company has established itself as a gold specialist while also diversifying into copper production. As of the second quarter of 2024, Harmony Gold Mining Company Limited (NYSE:HMY) has gained traction among institutional investors, increasing its hedge fund holders to 17 from 15 in the previous quarter, indicating growing confidence in the stock.
The company’s recent financial performance highlights its resilience and operational effectiveness. In the fiscal year ending June 30, 2024, Harmony Gold Mining Company Limited (NYSE:HMY) achieved an impressive gold production increase of 6%, totaling 1.56 million ounces, surpassing revised guidance. The underground recovered grades improved by 6%, reaching 6.11 grams per tonne. This operational excellence contributed to a substantial decrease in all-in sustaining costs, which fell by 4% to $1,500 per ounce, underscoring the company’s commitment to cost management amid rising gold prices.
Moreover, Harmony Gold Mining Company Limited (NYSE:HMY) operating free cash flow soared over 100%, reaching a record ZAR 13 billion (approximately $681 million), supported by a robust margin of 22%. This surge in free cash flow has bolstered Harmony’s balance sheet, leaving it in a net cash position of ZAR 2.9 billion (about $159 million). Headline earnings per share witnessed a remarkable 132% increase, reaching 1,852 South African cents (or $0.99), further solidifying the company’s financial health.
Looking ahead, Harmony Gold Mining Company Limited (NYSE:HMY) is strategically investing in high-quality assets, such as the Moab Khotsong and Mponeng mines, while pursuing transformative copper projects like the Wafi-Golpu and Eva Copper initiatives. These projects are projected to enhance the company’s future production profile, with copper expected to constitute 20% of total output in the next decade. The ongoing feasibility studies and resource drilling at these projects promise to unlock significant value for shareholders.
In summary, Harmony Gold Mining Company Limited (NYSE:HMY) stands as a compelling investment opportunity within the gold sector. With its strong operational performance, solid financial metrics, and strategic growth initiatives, Harmony Gold Mining Company Limited (NYSE:HMY) is well-positioned to capitalize on the favorable gold market dynamics, making it an attractive choice for hedge funds and individual investors alike.
03. Eldorado Gold Corporation (NYSE:EGO)
Number of Hedge Fund Holders: 19
Forward P/E Ratio as of September 29: 11.68
Eldorado Gold Corporation (NYSE:EGO), headquartered in Vancouver, Canada, is a leading mining company involved in the exploration, development, and sale of mineral products, primarily gold, across Turkey, Canada, Greece, and Romania. With a robust portfolio that includes a 100% interest in the Kisladag and Efemçukuru mines in Turkey, the Lamaque complex in Canada, and multiple gold mines in Greece, Eldorado Gold Corporation (NYSE:EGO) is well-positioned for growth. As of Q2 2024, the company reported a notable increase in hedge fund interest, with 19 hedge fund holders compared to just 12 in the previous quarter, signaling growing confidence in the company’s fundamentals.
In Q2 2024, Eldorado Gold Corporation (NYSE:EGO) achieved a gold production of 122,319 ounces, aligning with its guidance of 505,000 to 555,000 ounces for the year. The increase in production was aided by improved grades at key sites, including Lamaque and Kisladag, demonstrating the effectiveness of the company’s operational strategies. Despite some production disruptions due to labor negotiations, Eldorado expects to ramp up production in the latter half of the year, reinforcing its positive outlook.
Financially, Eldorado Gold Corporation (NYSE:EGO) reported net earnings of approximately $56 million, or $0.28 per share, driven by higher sales volumes and gold prices. Adjusted net earnings were even more impressive at $66.6 million, reflecting a strong operational performance. The company’s total cash costs stood at $940 per ounce sold, with all-in sustaining costs at $1,331 per ounce, both of which are consistent with annual guidance. While costs increased due to rising royalties and labor expenses, they remain manageable in the context of higher gold prices, which should bolster revenue moving forward.
Eldorado Gold Corporation (NYSE:EGO) maintains a solid liquidity position with $810 million in total liquidity, including $595 million in cash. This financial strength enables the company to support its growth initiatives, including significant capital investments in the Skouries project, which are expected to accelerate in the coming quarters. Overall, Eldorado Gold Corporation (NYSE:EGO) strategic positioning, operational efficiency, and robust financial metrics make it a compelling investment opportunity within the gold sector, particularly as hedge funds continue to show increased interest.
02. IAMGOLD Corporation (NYSE:IAG)
Number of Hedge Fund Holders: 19
Forward P/E Ratio as of September 29: 7.39
IAMGOLD Corporation (NYSE:IAG) is an intermediate gold producer with operations in Canada and Burkina Faso. The company holds a 100% interest in the Westwood project in Quebec, a 60% interest in the Côté Gold project in Ontario, and a 90% stake in the Essakane project in Burkina Faso. As of Q2 2024, 14 hedge funds held stakes in IAMGOLD Corporation (NYSE:IAG), down from 19 in the previous quarter.
IAMGOLD Corporation (NYSE:IAG) fundamentals suggest a positive outlook due to its operational performance and strong project portfolio. In Q2 2024, the company produced 122,319 ounces of gold, maintaining its full-year guidance of 505,000-555,000 ounces. The company’s gold production is expected to increase in the second half of the year as grades improve at multiple operations. Despite facing challenges like a temporary work stoppage at its Olympias mine, IAMGOLD remained on track with its production targets.
Financial metrics show that IAMGOLD Corporation (NYSE:IAG) is managing costs effectively. Total cash costs for Q2 2024 were $940 per ounce, while all-in sustaining costs (AISC) were $1,331 per ounce. These figures, although impacted by higher royalties due to increased gold prices and higher labor costs, were in line with the company’s guidance. IAMGOLD Corporation (NYSE:IAG) stable cost structure, coupled with its potential to benefit from sustained high gold prices, underscores its solid financial position.
In terms of financial results, IAMGOLD Corporation (NYSE:IAG) reported net earnings of $56 million for the quarter, or $0.28 per share, up from the previous year’s results. Adjusted net earnings were $66.6 million, or $0.33 per share, excluding one-time items such as foreign exchange gains and unrealized losses on derivative instruments. Furthermore, the company’s free cash flow was $33.9 million, excluding capital investments, indicating a strong cash generation capability.
IAMGOLD Corporation (NYSE:IAG) liquidity position remains robust, with total liquidity of $810 million, including $595 million in cash and cash equivalents. The company proactively extended its senior secured credit facility, providing additional financial flexibility to support growth initiatives, including the advancement of its Skouries project. With its strong balance sheet and a focus on maintaining cost discipline, IAMGOLD Corporation (NYSE:IAG) is well-positioned to continue delivering value to shareholders and remains a compelling pick among cheap gold stocks.
01. Gold Fields Limited (NYSE:GFI)
Number of Hedge Fund Holders: 20
Forward P/E Ratio as of September 29: 8.92
Gold Fields Limited (NYSE:GFI) is a leading gold producer with a diversified portfolio of assets spread across Chile, South Africa, Ghana, Canada, Australia, and Peru. Established in 1887 and headquartered in Sandton, South Africa, the company also explores for copper and silver deposits. In the second quarter of 2024, the stock attracted 20 hedge fund holders, up from 18 in the previous quarter, highlighting increased institutional interest.
Gold Fields Limited (NYSE:GFI) exceeded market expectations in Q2 2024 by reporting earnings per share (EPS) of $0.4344 against the forecasted $0.34, showcasing solid operational performance despite facing production challenges. The company’s financial health remains robust, with all its mining operations generating positive adjusted free cash flow despite a 20% year-over-year decline in overall production. Gold Fields Limited (NYSE:GFI) achieved a strong $320 million in adjusted free cash flow from operations, driven by higher gold prices that compensated for production setbacks.
The company’s financial strength is further underpinned by its diversified asset base. Its Australian mines contributed nearly half of the group’s production and cash flow in the first half of 2024, while operations in Ghana accounted for about a third. Additionally, the announcement of the acquisition of Osisko Mining’s Windfall project and ongoing discussions for the approval of the Tarkwa/Iduapriem joint venture in Ghana are expected to bolster Gold Fields Limited (NYSE:GFI) production capabilities and future growth prospects.
Gold Fields Limited (NYSE:GFI) also remains committed to shareholder returns, paying a dividend of ZAR0.30 per share, representing 40% of its normalized earnings for the half-year. While production guidance for 2024 has been revised down to between 2.05 million and 2.15 million ounces due to operational challenges at its South Deep and Cerro Corona mines, the company anticipates a stronger performance in the second half of 2024, with an expected output of over 1.2 million ounces. With a diversified portfolio, solid cash flow generation, and a strong dividend yield, Gold Fields Limited (NYSE:GFI) presents an attractive investment opportunity for value-focused investors looking to gain exposure to the gold mining sector.
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