Barrick Gold Corporation (NYSE:ABX) on comeback trail
The market news last week had it that there is some new opportunity for buying gold stocks. This might be the case, but this week, things seemed to have changed a bit. It looks like mining companies like Barrick Gold Corporation (NYSE:ABX) are now open to testing their lows. The buying opportunity has thus been deferred and speculators and investors will have to hold their horses. There are some distinct reasons why this retest is all set to come in. But this could well be the mark of the final bottom and present an excellent buying opportunity. Last weekend was the turning point and gold stocks started craning their necks and looked a little brighter. Most stocks cut through their 50-day moving averages as opposed to holding them.
In Monday’s trading session Barrick Gold Corporation (NYSE:ABX) stock rose by 2.37%. The opening price of the shares was $18.10 which climbed to an intraday high of $18.63 and closed at $18.14. Approximately 20.18 million shares were traded on Monday while the average volume of shares traded over 30 days was 17.25 million. The company has a market capitalization of $18.16 billion.
Is Barrick a buy?
The company’s shares are not much higher than what they were in 2003. At that point, gold was close to $400/ounce. This year, Barrick Gold Corporation (NYSE:ABX) projects to produce 7.2 million ounces of gold. This also means more of an upside of there is a rebound in gold. The company has suffered a lot due to the badly-timed Equinox purchase and spiraling costs that were largely tied to the Pascua-Lama project led to a lack of cash-flow. In addition to that the company also had a 75 percent dividend cut.
Despite all of this, at a 7-times 2013 financial year operational profit, the stock might still be a bargain. Most gold ETF’s have been able to lure investors back as they have been posting their highest net-flows in 2 years, from July-August.