Is AEM Stock a Screaming Buy After the 39% YTD Price Rally?

Value investing is a time-tested strategy that focuses on finding assets trading for less than their intrinsic value, allowing investors to buy such undervalued assets at a discount. This approach hinges on the idea that market prices often don’t fully reflect a company’s fundamentals, providing opportunities to benefit from market corrections in the long run.

A key metric for value investors is earnings yield, which offers insight into a stock’s profitability relative to its market price. Earnings yield is calculated by dividing a company’s earnings per share (EPS) by its current stock price (Earnings Yield = EPS / Current Stock Price). This figure represents the profit generated for each dollar invested, effectively serving as the inverse of the price-to-earnings (P/E) ratio. A higher earnings yield typically indicates that a stock may be undervalued and could provide growth potential, while a lower earnings yield could suggest overvaluation.

Pitney Bowes PBI, Mr. Cooper Group Inc. COOP, Barrick Gold GOLD, Quad Graphics QUAD and PDD Holdings Inc. PDD are a few solid high earnings yield picks for value investors.

Beyond identifying individual stocks, earnings yield also aids in comparing the stock market to fixed-income investments, like 10-year Treasury bonds. If the earnings yield of a market index surpasses the bond yield, it can indicate favorable conditions for investing in stocks over bonds, which is valuable for portfolio diversification.

The Winning Strategy

We have set an Earnings Yield greater than 10% as our primary screening criterion but it alone cannot be used for picking stocks that have the potential to generate solid returns. So, we have added the following parameters to the screen:

Estimated EPS growth for the next 12 months greater than or equal to the S&P 500: This metric compares the 12-month forward EPS estimate with the 12-month actual EPS.

Average Daily Volume (20 Day) greater than or equal to 100,000: High trading volume implies that a stock has adequate liquidity.

Current Price greater than or equal to $5.

Buy-Rated Stocks: Stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) have been known to outperform peers in any type of market environment. You can see the complete list of today’s Zacks #1 Rank stocks here.

Our Picks

Here we discuss five of the 23 stocks that qualified the screening:

Pitney Bowes: It is a global technology company powering billions of transactions — physical and digital — in the connected and borderless world of commerce. The Zacks Consensus Estimate for Pitney Bowes’ 2024 and 2025 earnings implies year-over-year growth of 850% and 176%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 3 cents and 7 cents, respectively, over the past seven days. PBI currently sports a Zacks Rank #1 and has a Value Score of A.

Cooper Group: It is engaged in non-banking services for mortgage loans and provides quality servicing, origination and transaction-based services principally to single-family residences primarily in the United States. The Zacks Consensus Estimate for Cooper Group’s 2024 and 2025 earnings implies year-over-year growth of 39% and 34%, respectively. In the past 30 days, the consensus mark for 2024 and 2025 EPS has been revised upward by 19 cents and 2 cents, respectively. COOP currently sports a Zacks Rank #1 and has a Value Score of B.

Barrick Gold: It is one of the largest gold mining companies in the world, having many advanced exploration and development projects located across five continents. The Zacks Consensus Estimate for Barrick Gold’s 2024 and 2025 earnings implies year-over-year growth of 54% and 48%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 2 cents and 14 cents, respectively, over the past 30 days. GOLD currently has a Zacks Rank #2 and a Value Score of A.

Quad Graphics: It is a provider of print and related multichannel solutions for consumer magazines, special interest publications, catalogs, retail inserts and circulars, direct mail products, books and directories. The Zacks Consensus Estimate for Quad Graphics’ 2024 and 2025 earnings implies year-over-year growth of 62% and 29%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 8 cents and 2 cents, respectively, over the past 30 days. QUAD currently has a Zacks Rank #2 and a Value Score of A.

PDD Holdings: It is a multi-national commerce group that operates a portfolio of businesses. The Zacks Consensus Estimate for PDD Holdings’ 2024 and 2025 earnings implies year-over-year growth of 83% and 11%, respectively. Estimates for 2024 and 2025 earnings per share have moved up by 6 cents and 9 cents, respectively, over the past 30 days. PDD currently has a Zacks Rank #2 and a Value Score of A.

You can get the rest of the stocks on this list by signing up now for a 2-week free trial to the Research Wizard stock picking and backtesting software. You can also create your own strategies and test them first before making investments.

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Disclosure: Officers, directors and/or employees of Zacks Investment Research may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material. An affiliated investment advisory firm may own or have sold short securities and/or hold long and/or short positions in options that are mentioned in this material.

Disclosure: Performance information for Zacks’ portfolios and strategies are available at: https://www.zacks.com/performance.

Zacks Investment Research

Mali's military government is demanding a $162 million tax settlement from Australia's Resolute Mining following the detention of its CEO, Terry Holohan, during a visit to the country.

Holohan was detained in Bamako, Mali's capital, along with two colleagues after attending meetings with tax and mining authorities.

This action has escalated tensions between the country's military junta and foreign mining companies, a crucial source of tax revenue.

After shares fell more than 40%, the Australian Securities Exchange halted trading, pending further news from the company, per Bloomberg.

Mali, Africa's third-largest gold producer, significantly contributes to the global gold supply, attracting several prominent international mining companies. Alongside Resolute, which operates the Syama mine, other notable miners active in Mali include Barrick Gold , operator of the Loulo-Gounkoto complex, as well as Allied Gold Corp. and B2Gold Corp., which manage the Sadiola and Fekola mines.

Resolute reported producing approximately 331,000 ounces of gold across its African sites in 2023, with Syama as its flagship Malian project. Still, the company's fiscal position at the end of the last quarter included a net cash reserve of $146 million – which is less than what the junta demands.

Resolute's contract for the Syama, set to run through 2029, previously granted favorable operational terms. However, the junta, which has governed Mali since 2020, recently began pressuring mining companies to renegotiate economic terms in a bid to increase national revenue from resources.

This trend coincides with a surge in the global gold market, with prices rising by 28% year-to-date. In a recent statement, Resolute called the Malian government's tax claims "unsubstantiated" and expressed its intention to work with authorities toward a resolution.

The junta's demands on Resolute are not isolated. Barrick Gold has also come under scrutiny, with the government seeking $500 million in funds that it claims are owed.

Despite the tensions, Barrick CEO Mark Bristow indicated that his company is engaged in discussions with Malian authorities to achieve a "mutually acceptable outcome." He noted that the firm paid out $85 million in the context of ongoing negotiations.

Barrick's Loulo-Gounkoto complex remains one of its most productive assets, yielding 683,000 ounces in 2023 from its total production of 4.05 million ounces. A disruption of such Tier 1 operation would have a notable impact on the company and the broader market.

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Shares of Royal Gold, Inc. RGLD have dipped 5% since it reported third-quarter 2024 results on Nov. 6 on a muted guidance despite record revenues and improved earnings.

RGLD reported adjusted earnings per share (EPS) of $1.47 in third-quarter 2024, beating the Zacks Consensus Estimate of $1.34. The company had reported an EPS of 76 cents in the year-ago quarter.

Including one-time items, the company reported an EPS of $1.46 compared with the prior-year quarter’s 75 cents.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

RGLD generated record revenues of $194 million, up 39.8% year over year. The upside was driven by higher average metal prices; gold sales from Mount Milligan; gold and silver sales from Pueblo Viejo; and gold, silver, zinc and lead production from Peñasquito. However, these factors were offset by lower gold sales from Andacollo, production from the Cortez Legacy Zone and silver sales from Khoemacau.

RGLD expects silver sales to fall slightly below the low end of the projection range due to decreased sales from Pueblo Viejo. Gold sales, which are the company's most important revenue driver, are expected to be at or below the mid-point of the company’s guidance range.

Stream revenues were $133 million and royalty revenues were $61 million in the September-end quarter. Stream revenues increased 34.4% year over year and royalty revenues rose 53.5%.

Royal Gold, Inc. Price, Consensus and EPS Surprise

Royal Gold, Inc. price-consensus-eps-surprise-chart | Royal Gold, Inc. Quote

The company’s cost of sales was $27 million in the third quarter compared with the prior-year quarter’s $21 million.

General and administrative expenses amounted to $10 million, up 2% year over year. The adjusted EBITDA was $156 million in the reported quarter, up 45.9% year over year. The adjusted EBITDA margin was 81% compared with the prior-year quarter’s 78%.

RGLD’s Q3 Cash Position

Net cash from operating activities was $137 million in the third quarter compared with the prior-year quarter’s $98 million. Royal Gold ended the quarter with cash and cash equivalents of around $128 million compared with $104 million at the end of 2023.

Royal Gold’s 2024 Outlook

The company expects silver sales to be below 3.2-3.8 million ounces. Total gold sales for 2024 are expected to be 215,000-230,000 ounces.

RGLD’s Price Performance

In the past year, shares of Royal Gold have gained 18.3% compared with the industry’s growth of 21.6%.

Royal Gold’s Zacks Rank

RGLD currently has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

RGLD’s Peer Performances in Q3

Agnico Eagle Mines Limited AEM reported third-quarter 2024 adjusted earnings of $1.14 per share, up from 44 cents in the year-ago quarter. The bottom line topped the Zacks Consensus Estimate of 98 cents.

AEM generated revenues of $2.16 billion, up 31.2% year over year. The top line surpassed the Zacks Consensus Estimate of $1.83 billion.

Barrick Gold Corporation GOLD posted third-quarter 2024 adjusted earnings per share of 31 cents. The figure missed the Zacks Consensus Estimate of 33 cents.

Barrick Gold recorded total revenues of $3,368 million, up 17.7% year over year. Total gold production was 943,000 ounces in the quarter, down 9.2% year over year.

Kinross Gold Corporation’s KGC third-quarter 2024 adjusted earnings per share were 24 cents compared with 12 cents in the prior-year quarter. It beat the Zacks Consensus Estimate of 18 cents.

KGC’s revenues rose 29.9% year over year to $1,432 million, surpassing the Zacks Consensus Estimate of $1,186.7 million. The company benefited from higher average realized gold prices.

Zacks Investment Research

Taking full advantage of the stock market and investing with confidence are common goals for new and old investors, and Zacks Premium offers many different ways to do both.

The research service features daily updates of the Zacks Rank and Zacks Industry Rank, full access to the Zacks #1 Rank List, Equity Research reports, and Premium stock screens, all of which will help you become a smarter, more confident investor.

Zacks Premium includes access to the Zacks Style Scores as well.

What are the Zacks Style Scores?

The Zacks Style Scores is a unique set of guidelines that rates stocks based on three popular investing types, and were developed as complementary indicators for the Zacks Rank. This combination helps investors choose securities with the highest chances of beating the market over the next 30 days.

Based on their value, growth, and momentum characteristics, each stock is assigned a rating of A, B, C, D, or F. The better the score, the better chance the stock will outperform; an A is better than a B, a B is better than a C, and so on.

The Style Scores are broken down into four categories:

Value Score

Value investors love finding good stocks at good prices, especially before the broader market catches on to a stock's true value. Utilizing ratios like P/E, PEG, Price/Sales, Price/Cash Flow, and many other multiples, the Value Style Score identifies the most attractive and most discounted stocks.

Growth Score

While good value is important, growth investors are more focused on a company's financial strength and health, and its future outlook. The Growth Style Score takes projected and historic earnings, sales, and cash flow into account to uncover stocks that will see long-term, sustainable growth.

Momentum Score

Momentum trading is all about taking advantage of upward or downward trends in a stock's price or earnings outlook, and these investors live by the saying "the trend is your friend." The Momentum Style Score can pinpoint good times to build a position in a stock, using factors like one-week price change and the monthly percentage change in earnings estimates.

VGM Score

If you like to use all three kinds of investing, then the VGM Score is for you. It's a combination of all Style Scores, and is an important indicator to use with the Zacks Rank. The VGM Score rates each stock on their shared weighted styles, narrowing down the companies with the most attractive value, best growth forecast, and most promising momentum.

How Style Scores Work with the Zacks Rank

The Zacks Rank is a proprietary stock-rating model that harnesses the power of earnings estimate revisions, or changes to a company's earnings expectations, to help investors build a successful portfolio.

Investors can count on the Zacks Rank's success, with #1 (Strong Buy) stocks producing an unmatched +25.41% average annual return since 1988, more than double the S&P 500's performance. But the model rates a large number of stocks, and there are over 200 companies with a Strong Buy rank, plus another 600 with a #2 (Buy) rank, on any given day.

With more than 800 top-rated stocks to choose from, it can certainly feel overwhelming to pick the ones that are right for you and your investing journey.

That's where the Style Scores come in.

You want to make sure you're buying stocks with the highest likelihood of success, and to do that, you'll need to pick stocks with a Zacks Rank #1 or #2 that also have Style Scores of A or B. If you like a stock that only as a #3 (Hold) rank, it should also have Scores of A or B to guarantee as much upside potential as possible.

As mentioned above, the Scores are designed to work with the Zacks Rank, so any change to a company's earnings outlook should be a deciding factor when picking which stocks to buy.

Here's an example: a stock with a #4 (Sell) or #5 (Strong Sell) rating, even one with Style Scores of A and B, still has a downward-trending earnings outlook, and a bigger chance its share price will decrease too.

Thus, the more stocks you own with a #1 or #2 Rank and Scores of A or B, the better.

Stock to Watch: Kinross Gold (KGC)

Based in Ontario, Canada, Kinross Gold Corporation is involved in the exploration and operation of gold mines. It ranks among the top 10 gold mining companies in the world, with a 2023 production of around 2.1 million gold equivalent ounces. The company's operations are primarily located in - the Americas (roughly 71% of 2023 production). It holds major assets in Canada and the United States. It is mainly involved in the exploration and operation of gold mines. Kinross also produces and sells silver.

KGC is a #2 (Buy) on the Zacks Rank, with a VGM Score of A.

Additionally, the company could be a top pick for growth investors. KGC has a Growth Style Score of A, forecasting year-over-year earnings growth of 56.8% for the current fiscal year.

Six analysts revised their earnings estimate upwards in the last 60 days for fiscal 2024. The Zacks Consensus Estimate has increased $0.09 to $0.69 per share. KGC boasts an average earnings surprise of 32.5%.

With a solid Zacks Rank and top-tier Growth and VGM Style Scores, KGC should be on investors' short list.

Zacks Investment Research