Barrick (GOLD) Stock Up 54% in 6 Months: What’s Driving It?

Barrick Gold Corporation’s GOLD shares have surged 53.5% in the past six months compared with the industry’s rise of 33.2% and S&P’s 2.7% decline.

The company has a market cap of around $47.9 billion. Average volume of shares traded in the past three months was nearly 18,924.8K. The company has an expected earnings per share (EPS) growth rate of 54.9% for 2020.

Let’s analyze the factors that are driving the stock.

Driving Factors

Focus on major growth projects, debt-reduction and rising gold prices are contributing to the company’s share price performance.

Barrick is focused on its major exploration programs. The company’s growth projects across Turquoise Ridge, Goldrush and Cortez Deep South in Nevada are currently in execution. Construction of the third shaft at Turquoise Ridge is progressing per schedule and is expected to deliver additional value. The Deep South project is also expected to contribute to Cortez’s production.

In March 2020, Barrick announced that the proposed expansion of the Pueblo Viejo gold mine will boost the mine life and also contribute to the economy of Dominican Republic. The project will require an initial investment of $1.3 billion for expansion of the process plant and the tailings facility. The investment will extend the mine’s life and unlock potential to increase exports by $22 billion. The Pueblo Viejo expansion will also enable the mine to exploit the lower grades in the ore body.

Barrick is also benefiting from its actions to reduce debt. The company cut its total debt by 3.2% year over year to $5.5 billion at the end of 2019. Its total debt further declined to $5.2 billion at the end of the first quarter. Also, the company has a strong liquidity position and generates healthy cash flows, which positions it well to benefit from development, exploration and acquisition opportunities. Barrick’s cash and cash equivalents surged 55% year over year to nearly $3.3 billion at the end of the first quarter.

Further, gold has been the bright spot this year as fears over the coronavirus pandemic made it the most attractive safe-haven asset. Gold prices have gained around 13% in the second quarter — the highest quarterly percentage increase in over four years.

Notably, gold crossed the $1,800 mark on Jun 30 and hit a high of $1,804 an ounce. Global uncertainty along with the coronavirus pandemic, renewed U.S.-China tensions and the civil unrest in the United States are contributing to the rally.

Moreover, earnings estimate revisions have great impact on stock prices. In the past two months, the Zacks Consensus Estimate for second-quarter earnings for Barrick moved up 5.9%.  

Zacks Rank & Key Picks

Barrick currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the basic materials space are Sandstorm Gold Ltd SAND, Harmony Gold Mining Company Limited HMY and AngloGold Ashanti Limited AU, all carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 (Strong Buy) Rank stocks here.

Sandstorm Gold has an expected earnings growth rate of 55.6% for 2020. The company’s shares have surged 77.3% in the past year.

Harmony Gold has an expected earnings growth rate of 264.3% for fiscal 2020. Its shares have returned 115.1% in the past year.

AngloGold has an expected earnings growth rate of 109.9% for 2020. The company’s shares have surged 71.3% in the past year.

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