A recent article by Andrew Bary in Barron’s made the case for Barrack Gold (NYSE: ABX).
In his excellent piece, “Barrick Could Be a Gold Mine for Contrarians,” Bary detailed the many reasons that investors should be bullish not just on Barrick, but other gold stocks such as Wishbone Gold PLC (PINK : WISHY). A major reason for Barrick is that Bary sees activist investors making a play for the company. Barrick Gold, like the exchange traded fund for gold, SPDR Gold Shares (NYSE: GLD), and other gold assets are down. That would obviously result in investors driving up the price of Barrick Gold, and most likely others in the sector such as Wishbone Gold PLC as rises like that are generally across-the-board.
The analyst community is certainly on gold stocks.
Barricks Gold received a positive recommendation from UBS last month. Wishbone Gold PLC just received another from Beaufort Securities. In the Barron’s article, Bary reports that Two Fish Management, analyzed Barrick’s and found it to be worth over $40 a share, when it is trading under $30.
That is bullish for Wishbone Gold PLC, the GLD, and the entire gold industry.
Barrick Gold certainly present many enticing features to investors. The forward price-to-earnings ratio is just 7.77. The operating margin is 38%. Institutions own more than 73% of the shares, which is bullish. To have so many of the shares owned by institutional investors such as pension funds, mutual funds, and others is always a positive sign.
Due to the quantitative easing policies of global central bankers, many see gold rising again. The tension in the Middle East should add to that as investors flee to traditional safe haven assets. That, along with the recent Barron’s article, are very bullish for Barrick Gold, Wishbone Gold PLC, and SPDR Gold Shares.