We recently published a list of the 10 Best Canadian Stocks to Buy Under $10. In this article, we are going to take a look at why New Gold Inc. (NYSE:NGD) is one of the best Canadian stocks to buy under $10.
How are Canadian Stocks Performing?
The Canadian stock market had a positive third quarter, following a sluggish start earlier in 2024. The market was driven by domestic rate cuts and rebounding global markets. The BMO S&P 500 Index ETF, iShares Core S&P/TSX Capped Composite Index ETF, and iShares S&P/TSX 60 Index ET have surged over 33%, 20%, and 22% year-to-date, as of November 27.
If we talk about year-over-year headline inflation, it has cooled as per the Bank of Canada’s target rate of 2%. Hence, policymakers have cut rates four times consecutively and another 50 basis points cut is expected in December. The Bank of Canada’s benchmark lending rate stands at 3.75%, while economists are projecting a terminal interest rate of as low as 2%.
The managing director and head of macro strategy at Desjardins Group pointed out that the GST tax break from December 14 to February 15, 2025, will have a high fiscal multiplier, adding a noticeable boost to growth in the first half of 2025. The tax break is to increase consumer spending which has been severely impacted by interest rate increases and high debt levels since 2022. The tax break will allow consumers to buy essentials such as groceries, snacks, and kids’ clothing – all tax-free.
In the long run, the potential trade tariffs pose a wider threat to companies. The newly elected U.S. President Trump has vowed to impose a 25% tax on imports from Canada as well as Mexico. In 2023, the U.S. accounted for more than 75% of exports from Canada.
READ ALSO: Jim Cramer’s Latest Lightning Round: 11 Stocks to Watch and Jim Cramer on AMD and Other Stocks.
Canada’s Precious Metal and Mining Industry: The Real Deal
Some of the largest Canadian companies are involved in minerals and mining of rare earth metals, mainly engaged in gold and uranium exploration. Canada is also one of the largest producers of rare earth metals including Gold and Uranium. According to the World Gold Council, Canada was the fourth largest producer of gold with a total production of 192 tonnes in 2023. Are you interested in Gold Stocks to Buy Under $30? (Click Here)
In addition, Canada was the second largest Uranium producer in 2022, accounting for a total production of 7,351 tonnes, as per the World Nuclear Association. Cigar Lake was the largest operational highest-grade Uranium mine in northern Saskatchewan, Canada.
With that, let’s take a look at where New Gold Inc. (NYSE:NGD) ranks among the best Canadian stocks to buy under $10.
A closeup view of a large gold mine, illustrating the company’s gold properties.
New Gold Inc. (NYSE:NGD)
Number of Hedge Funds Holders: 23
Share Price as of November 27: $2.74
New Gold Inc. (NYSE:NGD) is a leading gold mining company based in Toronto, Canada. The company has two core-producing assets including the Rainy River gold mine and the New Afton copper-gold mine. New Gold is focused on the acquisition, exploration and development of natural resource properties. In the third quarter of 2024, the company reported a record quarterly free cash flow of $57 million, reflecting strong financial performance. New Gold Inc. improved its production by 40% compared to Q2 2024, while decreasing its sustaining costs by 13%.
New Gold Inc. (NYSE:NGD) has achieved guidance for eight consecutive quarters, driven by production improvement of its both mines. The company projects to achieve 600,000 ounces of gold equivalent production in fiscal year 2024, up by 42% compared to FY2023. According to the Heartland Value Fund, NGD is on track to surpass AISC by more than 50% by 2026. If you want to know what the investment firm further said about NGD, the copy of investors letter can be downloaded here.
Jim Simons’ Renaissance Technologies increased its stake in NGD by 13% in Q3 from Q2 and now holds 22,526,464 shares valued at $64.87 million.
Overall, NGD ranks 6th on our list of the best Canadian stocks to buy under $10. While we acknowledge the potential of NGD as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NGD but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
READ NEXT: 8 Best Wide Moat Stocks to Buy Now and 30 Most Important AI Stocks According to BlackRock.
Disclosure: None. This article is originally published at Insider Monkey.
