With the geopolitical uncertainty and fear created by the Russian invasion of Ukraine, investors are returning to a classic hedge: precious metals. With a ban on Russian oil exports leading to more inflation, the old idea of owning gold – and gold stocks – is coming back. Nonetheless, certain mining equities for the yellow metal may be undervalued.
Take the South African minerASA Gold and Precious Metals Ltd. (ASA, Financial), for example. The stock is now trading at a 5% discount from its book value. This, despite having rallied lately from late January low of $19.50 to its current price of $23.60. Average daily volume is light at just about 80,000 shares, making it an unlikely candidate for large investors looking of liquidity.
Smaller investors might be interested, however, in a gold mining outfit that trades at slightly less than book and with a price-earnings ratio of 24. ASA Gold pays a dividend as well, only 9 cents per share, but it’s an indication that the company likes those who invest the shares. One other positive is that ASA has no long-term debt.
The GuruFocus summary of financials for the gold mining company shows three good signs, four medium warning signs and one severe warning sign:
Couer Mining Inc. (CDE, Financial) is attractive only because of the amount of insider buying by four high-level insiders who recently showed their confidence by purchasing shares of their own company. The gold and silver miner operates at a loss right now, so there is no price-earnings ratio. The stock trades at a price-book value ratio of 1.64. The Canadian miner has a market capitalization of $1.31 billion and an enterprise value of $1.65 billion.
The four Couer Mining insiders who bought the stock are: Chairman Robert E. Mellor, who picked up 1000 shares on March 1, Chief Operating Officer Michael Routledge, who purchased 11,760 shares on Feb. 25, Chief Financial Officer Thomas Whelan, who bought 10,000 shares on Feb. 25, and CEO Michael Crebs, who purchased 5,000 shares on Feb. 23.
It should also be noted that legendary hedge fund managers Jim Simons (Trades, Portfolio) and Paul Tudor Jones (Trades, Portfolio) made initial purchases of Couer, according to regulatory filings dated Dec. 31, 2021.
Taken by itself, insider buying is not the only reason to consider purchases, but taken together with other factors, it can be a compelling indicator.
The GuruFocus finanicials summary for Couer finds five good signs and two severe warning signs:
