The Gold of the Gold Industry: Goldcorp Inc. (USA) (GG), Newmont Mining Corp (NEM)

The Canadian gold mining, Kinross Gold Corporation (USA) (NYSE:KGC) is trading at a forward P/E (1yr) of 7.54x, making it cheaper than Newmont and Goldcorp. It has a dividend yield of 2% and a healthy PEG of 1.51. Just like Goldcorp, it has a mean recommendation of 2.2 on the sell side, making it a top buy in the gold industry. Moreover, it has a mean target price of $12.32 on the sell side; hence, an upside potential of whopping 54%. Therefore, it’s a must buy.

Conclusion

One of the great things about Goldcorp over the years has been its ability to mint substantial profits without risking itself to high levels of debt. When compared to its industry, it has a 25% higher free cash flow to debt ratio. Moreover, it has one of the lowest cash cost per ounce of gold produced. Further, it has significantly more operating margins than its competitors. Having said this, company’s outlook for the future looks to be in a really good shape as it is expected to produce incremental levels of gold. As cost per ounce of gold produced is expected to decrease to $525 in 2013, margins are bound to go even higher. Moreover, investments in Argentina and Canada will make sure that the production levels continue to increase in the years ahead. The bottom line is that Goldcorp is one of the best buys in the gold industry at this moment; hence, it’s a must buy.

The article The Gold of the Gold Industry originally appeared on Fool.com and is written by Waqar Saif.

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