Dallas, Texas 09/12/2013 (Financialstrend) – Investors have a great affinity for stocks that mange to rise beyond the Street in a consistent manner without any meltdown risk or overstepping their fundamentals. The best stocks are those that offer steady and sustainable gains that are not affected by market swings. In addition, they should have improving and robust financial metrics that provide a solid price-growth.
The ABX scan
Let’s scan Barrick Gold Corporation (USA) (NYSE:ABX) on all these metrics and see exactly where it stand on the future gains front. Over the last 4 years, the cost of producing gold has been ever-increasing. ABX has been hit with a 19.3% rise in the production of 1 ounce of the yellow metal while Goldcorp and Newmont have been hit with increases of 5.7% and 21.3% respectively. Gold prices have also been on the decline which has left gold mining companies such as ABX reeling under steep losses and write-downs.
Resultantly, the company has had to chop its capital expenditures by over $4.00B over a period of 4 years. Apart from this, ABX has some very ambitious plans of divesting its high-cost production mines to boost its cash-flow and has laid-off 30% of its workforce. Ballooning high costs have been a major hurdle not just for ABX but for the gold industry as a whole.
Apart from this, very recently, the Chilean government imposed a $15.8M fine on the company for violating environmental norms at the Pascua Liam mine and that operation was forced to shut down. This has been a major blow to the miner’s finances. However, news has it that the company is all set to present a new water-management plan to the Chilean government and that might just be the key to reversing ABX’s fortunes.
At the moment, the company doesn’t really have much going for it and the gold market is not being a good friend to it either. Investors should take a second look at its potential to put the pieces together and enter into profitable waters.