Zacks Investment Ideas Highlights: GDX and NEM

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Chicago, IL – April 14, 2022 – Today’s Zacks Investment Ideas feature highlights VanEck Gold Miners ETF GDX and Newmont Corp. NMS.

Gold miners hit new 52-week highs

When stocks are dynamic and volatile, using a strategy that takes advantage of market momentum can not only help us weather these uncertain times, but also thrive and outperform. This is what separates good investors from great ones. Top performers are able to adapt their strategies to the current market environment. Similar to an offensive caller, these investors successfully adapt to what the other side (the market) is doing by targeting the right industries and executing the appropriate strategies.

On Tuesday, the US Department of Labor released March consumer price index (CPI) data, which showed prices jumped 8.5% from a year ago, slightly higher. above expectations. Historically considered a hedge against inflation and currency devaluation, precious metals can be a great way to diversify a portfolio, especially when many stocks are falling.

Metals have outperformed over the past year and should continue to do so as we move into the second quarter. While the past few months have been treacherous for passive equity investors, gold has made a stealthy move higher and is up more than 8% on the year.

There are many ways to gain exposure to precious metals. While investing directly in metals can be lucrative, decades of market history have shown us that it is far more profitable to own stocks of companies that produce commodities than the commodities they produce. One of the best ways to target these metals from an investment perspective is to own the shares of mining companies. These stocks typically outperform the underlying precious metals due to growth in their intrinsic value.

Precious metals do not have the potential for intrinsic value growth like stocks. The ability of companies to increase their intrinsic value has always allowed equities to outperform other types of investments. As the intrinsic value of a business increases, the business can increase its production or services, which in turn creates more revenue.

The performance of exchange-traded funds (ETFs) can also serve as a confirmatory indicator that supports our investment thesis. the VanEck Gold Miners ETF tracks the performance of companies involved in the gold mining industry. The stock we will discuss below is GDX’s top holding and represents over 15% of GDX’s total holdings. GDX hit a new 52-week high today and is up more than 27% this year alone. The VanEck Gold Miners ETF is showing relative strength and looks set to continue its outperformance.

After lagging throughout the second half of last year, the basic materials sector exemplifies the sector rotation that has occurred, as it significantly outperformed the major indices with a return of 13.54%. since the beginning of the year. This sector is currently ranked in the top 13% of the 16 sectors ranked by Zacks.

Digging a little deeper, the stock we will analyze below is part of the Zacks Mining – Miscellaneous industry group, which ranks in the top 19% of all Zacks-ranked industries. This industry group is also relatively undervalued (10.0 forward P/E). By targeting the stocks of major industry groups, we can significantly improve our investment success.

Newmont Corp.

Newmont Corp. is engaged in the production and exploration of gold. The Company mainly operates in North America, South America, Australia and Africa. NEM also explores copper, silver, zinc and lead. Newmont was founded in 1916 and is based in Denver, CO.

NEM has exceeded earnings estimates in two of the past three quarters. The metal mining company recently reported fourth-quarter EPS of $0.78 in February, a surprise of +2.63% from the $0.76 estimate. The shares are up 36.5% so far this year.

What the Zacks Model Reveals

The Zacks Earnings ESP (Expected Surprise Prediction) seeks to find companies that have recently experienced positive earnings estimate revision activity. This more recent information has proven to be very useful in finding positive earnings surprises, giving investors a head start during earnings season. In fact, combining a Zacks No. 3 or higher ranking and a positive earnings ESP, stocks produced a positive surprise 70% of the time according to our 10-year backtest.

NEM is currently a Zacks Rank #3 stock and has an Earnings ESP of +8.37%. Another beat could be expected when the company releases first quarter results on April 22.n/a. Analysts have increased their first quarter results by +13.89% over the past 60 days. The Zacks consensus estimate now stands at $0.82, which would translate to growth of 10.81% from the same quarter a year ago.

Keep an eye on this gold producer as the mining group continues to outperform the market.

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Past performance is not indicative of future results. The potential for loss is inherent in any investment. This document is provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold any security. No recommendation or advice is given as to whether any investment is suitable for any particular investor. It should not be assumed that investments in the securities, companies, sectors or markets identified and described have been or will be profitable. All information is current as of the date hereof and is subject to change without notice. The views or opinions expressed may not reflect those of the company as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management of securities. These returns come from hypothetical portfolios composed of stocks with Zacks Rank = 1 that have been rebalanced monthly without transaction fees. These are not the returns of actual stock portfolios. The S&P 500 is an unmanaged index. To visit https://www.zacks.com/performancefor more information on the performance figures displayed in this press release.

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VanEck Gold Miners ETF (GDX): ETF Research Reports

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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