With the gold and silver bouncing off 2021 lows this week, it might be worthwhile to see if value exists among stocks in the precious metals sector. Applying basic principles of analysis found in Benjamin Graham’s classic of value, "The Intelligent Investor," here are four mining stocks that pass the “below book value” metric. Needless to say, more extensive research would be required before investment consideration, but these might be candidates for more analysis.
Alamos Gold Inc. (AGI, Financial) is headquartered in Toronto with active mining operations in Canada and Mexico and development-stage projects in Canada, Mexico, Turkey and the United States. The company is trading right now at a 10% discount to its book value. Growth in earnings per share hit 49% this year. The five-year earnings per share growth is 16%. Alamos has no long-term debt and a current ratio of 3.3. Investors receive a dividend yield of 1.29%. Average daily volume is almost 2.5 million shares on the New York Stock Exchange.
Eldorado Gold Corp. (EGO, Financial) is based in Vancouver, British Columbia with precious metals mining operations in Europe, Asia and the Americas. Shares can be purchased in the company at 44% of book value. Earnings per share growth this year came in at 19.65%. The past five-year earnings growth is 15.5%. Eldorado’s shareholder equity greatly exceeds the amount of long-term debt. The price to free cash flow metric is 10.78. It trades on the NYSE with average daily volume of 1.44 million shares.
Equinox Gold Corp. (EQX, Financial) is another Canandian miner with headquarters in Vancouver. The stock trades at a 19% discount from book. Growth in earnings per share this year came to 157%. The company's earnings per share growth record on a five-year basis is 15.3%. Equinox’s long-term debt is significantly exceeded by shareholder equity and the current ratio is 3.1. The stock trades on the American Stock Exchange with 1.73 million shares of average daily volume. It hit new 52-week lows this week, closing at $6.41 – that’s down from $13 in October 2020.
Iamgold Corp. (IAG, Financial) has headquarters in Toronto and operates mines in North America, South America and West Africa. Currently, the stock is available for purchase at 47% of its book value. The price-to-free cash flow is 4.94. Earnings per share increased this year at 110%. The past five-year earnings per share growth is 15.3%. Equity greatly exceeds long-term debt. The current ratio is a green 2.70. The NYSE-listed company trades an average daily volume of 4.2 million shares.
Stocks like these, selling for less than their book value, usually have enough issues that mainstream investors find them unappealing. Keeping that in mind, it may be possible to uncover significant value among such securities, especially for those who may be taking a long-term approach. If inflation rears its ugly head sometime in the next year or two, it’s possible that gold and silver mining stocks could shine again.
