Our Top Trading Pick is AngloGold Ashanti (AU)
Precious metal stocks hit their highs for the year in the first week of August 2020.
AngloGold topped out at about $38.50 in August and in the correction reached a low near $20.15.
AngloGold Ashanti (AU)* $23.47 reached that low in the final week of November. It has rallied about 20% off that low and is in a base-building pattern. The shares now appear ready to leave its stage one chart pattern and enter the stage two rally phase.
AU’s valuation is attractive. Its trailing twelve-month (ttm) p/e ratio is 10. Its forward p/e is projected at 7.5. This leaves room for a higher p/e re-rating. AU pre-announced a blow-out 2020 year. This will be officially released Feb 22, 2021. 2019 earnings were $0.91 per share with 2021 earnings per share in the area of $2.40.
AngloGold Ashanti sees earnings almost triple as gold prices surge Feb 9, 2021
- Old school value investing: low PE ratio – strong earnings growth, and strong trends in the industry looking forward.
While the stock, and industry could break lower, supporting technical indicators suggest the shares have been under accumulation.
We believe this is a good omen for the gold and silver industry as a whole. Oil is back at $60 for Brent, supporting the thesis that commodities are attracting market attention. Silver stocks are now leading gold stocks and also look attractive within the precious metal complex.
Recent Broker ratings:
- BMO Capital has an outperform rating on AU with a $36 price target.
- RBC Capital also has an outperform rating on AU with a $40 price target.
WARNING: AU can be a very violent trading stock. We say that in both the good sense of opportunity, and as a warning that AU is better trading company than a long-term hold as a growth company. No need to use margin. You will have plenty of action with this stock. 5% to 10% daily moves happen frequently. Average daily trading volume is 2.9 million shares, so there is good trading liquidity.
AU produces about 7% or the world’s gold production. While originally a South African miner, AngloGold has no mining operations in South Africa. They are a geographically diversified precious metal producer.
About the LOTM Investment Style:
- We are fundamental value investors first, and technical investors for trends and timing.
- Our trading and investing approach considers the Macro opportunity first, Industry second, and Company selection within the selected industries third.
- We like holding periods of three to five years in our core positions to give us time to get returns that are double and higher our core position costs.
- We are Tax conscious Investors.
- We build core positions in our selected Industry/Companies and will trade around a core position.
Our current focus is with companies related to Blockchain/Crypto, Commodities and Deep Value opportunities.
Training, Coaching & Mentoring available
Where Value meets Buy Signals!
Feel free to forward or recommend to others.
Where Value meets Buy Signals!
Feel free to forward or recommend to others.
* An account related to LOTM holds a position in this security.
Neither LOTM nor Tom Linzmeier is a Registered Investment Advisor.
Please refer to our web site for full disclosure at www.LivingOffTheMarket.com ZTA Capital Group, Inc.
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