We recently compiled a list of the 7 Best Canadian Stocks Under $20. In this article, we are going to take a look at where B2Gold Corp. (NYSE:BTG) stands against the other Canadian stocks under $20.
What’s Happening in the Canadian Stock Market?
The Canadian economy is beginning to settle down as inflation is on a steady downward trend and the Bank of Canada has also taken an easier policy stance, thereby paving the way for stronger economic growth moving forward. On July 19, Reuters reported that the Bank of Canada cut its overnight interest rates by 25 basis points to 4.5% based on the expectation that inflation will continue to fall.
Inflation rates in Canada cooled a little more than expected making interest rate cuts more likely. On July 16, as per Reuters, June 2024 Consumer Price Index (CPI) cooled down to 2.7% a 0.1% decrease month-over-month thereby paving the way for an interest rate cut.
As a result of the interest rate cut, the Canadian stock market was seen performing better. On August 16, Reuters reported that the Canadian stock index ended higher on Friday and witnessed its biggest weekly advance of the year. Investors globally have been cheering the recent signs of the US economic resilience and the recent record high gold prices also boosted the mining sector
The S&P/TSK composite index ended up 0.1% at 23,054.61, posting a seven-day gain streak, recorded as the longest daily winning streak since April 2023.
Looking at a sectoral analysis, the materials group that comprises metal minerals and fertilizer companies was up 1.5% as the price of gold went up by 2% to an all-time high. Moreover, the financial market, which contributed 29% to TSK weighting, grew by 0.6%. The energy sector was a drag, however, and fell 1.1% due to lower oil prices, which settled at $76.65 1.9% lower than expected. The weaker price of oil was mainly attributed to slower demand from China.
On August 13, Ross Healy, chairman of Strategic Analysis Corporation and portfolio manager at MacNicol & Associates Asset Management, appeared on Bloomberg to discuss the performance of TSK and the US stock market. Ross Healy, mentioned that the Canadian stock market is trading at 1.5 times its adjusted book value, whereas the NASDAQ is trading at 9.5 times its book value. Mentioning these numbers Ross Healy, stated that for investors looking to invest for 5 years or longer, the Canadian stock market looks more lucrative due to its potential for growth and the portfolio of stocks it has to offer.
Ross Healy, further believes that we have had a long US advantage and now the market is heading towards a Canadian advantage. Moreover, the precious metal and gold options in the TSK index make the market poised for growth in the long term. Ross Healy, while stating his bull case for gold companies mentioned that companies that have good money on their balance sheets and have been able to find underdeveloped projects to work on have been successful when compared to their competitors.
Our Methodology
To compile the list of 7 best Canadian stocks under $20 we used the Finviz screener. We used the screener to filter out Canadian Stocks that were trading under $20 and sorted them by their market capitalization to get a consolidated list of stocks. Next, we ranked these stocks based on the average price target upside as per Wall Street analysts. The stocks are ranked in ascending order of the average price target upside, as of August 18. Moreover, we have also mentioned the share price of each stock as of August 18, 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
Aerial view of a gold mine in Mali, showing the scale of the mining operations.
B2Gold Corp. (NYSE:BTG)
Average Price Target Upside as of August 18: 49.71%
Share Price as of August 18: $2.69
B2Gold Corp. (NYSE:BTG) is a low-cost global gold producer based in Vancouver, Canada. The company mainly engages in gold production and has mines operating in Mali, Namibia, and the Philippines. It also has its Goose Project which is under construction in northern Canada and other development projects in Colombia and Finland. As per the company’s forecast, B2Gold Corp. (NYSE:BTG) aims to produce between 800,000 and 870,000 ounces of gold in 2024.
B2Gold Corp. (NYSE:BTG) posted a successful Q2 2024, despite a production setback from an excavator tipover. As a result, the total production during the quarter decreased 5.8% subsequently and also resulted in reduced production guidance by around 50,000 ounces. However, despite the production decrease the company was still able to generate $192 million in operating cash flow.
Management has been focused on its ongoing projects to improve its production and cash costs. It is focused on building new projects and improving the production capacity of its existing assets. For instance, the Fekola complex is expected to contribute over 300,000 ounces annually starting next year. On the other hand, its Goose project in Canada is advancing and is expected to start production by the second quarter of 2025. Looking ahead, the Gramalote project, though still under evaluation, has the potential to add around 200,000 ounces to B2Gold Corp. (NYSE:BTG) production capacity.
Is B2Gold Corp. (NYSE:BTG) a good investment?
We acknowledge that the company faced challenges during the quarter due to the excavator incident. However, if you look at its 10-year history you will see that the company has been able to grow its revenue by 14% and EBITDA by 17% indicating its robust fundamentals. Moreover, its balance sheet is also strong with more than $306.9 million in cash and cash equivalents. A strong balance sheet topped with management’s efforts to leverage its existing assets to improve production makes B2Gold Corp. (NYSE:BTG) an attractive option.
In addition, BTG is also cheap at current levels. It is trading at 11 times its forward earnings, which is a 30% discount to its sector. 14 analysts have a Strong Buy rating on the stock, with their 12-month median price target of $4.30 presenting an upside of 49.71% from the current level.
Overall BTG ranks 1st on our list of the best Canadian stocks under $20. While we acknowledge the potential of BTG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than BTG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.