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Time to buy the dip in this gold stock?

Commentaries & Views

Canadian-based mining stock'Kinross Gold Corporation (NYSE:KGC)'is down 1.4% to trade at $5.84 today. It's been a rough year for KGC, which sports a 20% year-to-date deficit and fell to an annual low of $5.62 on Aug. 20. With the stock so close to those lows, is there any chance of a rebound?

Unfortunately, there's not a lot of pessimism to be unwound. The majority of analysts rate KGC a "buy" or better, while a slim 1.1% of the stock's total available float is sold short. Moreover, Kinross Gold offers a forward dividend of $0.12 and a dividend yield of 2.03%.

From a fundamental perspective though, Kinross Gold stock is shaping up to be a decent value play. KGC now trades at an extremely attractive price-earnings ratio of 5.81 after its huge drop in price. The mining company has grown revenues 31% since fiscal 2017, only experiencing a decline in annual revenues in fiscal 2018. Kinross Gold's net income has also increased 190% since fiscal 2017, also experiencing a decline in annual net income for fiscal 2018.

KGC has a fairly average balance sheet with $744.3 million in cash and $1.5 billion in total debt. Kinross Gold stock has a price-book value ratio of 1.15, meaning the mining company’s market cap is only 15% higher than KGC's total equity, giving Kinross Gold'stock minimal downside risk. Overall, Kinross Gold stock offers a good opportunity for value investors to buy the dip at the moment.

It's also worth noting that KGC ranks low on the Schaeffer's Volatility Scorecard (SVS), with a score of just 19 out of 100. In other words, the security has consistently realized lower volatility than the options pits have priced in, making the equity a potential'premium-selling candidate.

Disclaimer: The views expressed in this article are those of the author and may not reflect those of Kitco Metals Inc. The author has made every effort to ensure accuracy of information provided; however, neither Kitco Metals Inc. nor the author can guarantee such accuracy. This article is strictly for informational purposes only. It is not a solicitation to make any exchange in commodities, securities or other financial instruments. Kitco Metals Inc. and the author of this article do not accept culpability for losses and/ or damages arising from the use of this publication.