5 LSE Listed Gold Stocks In Investors’ Bucket- POLY, CEY, POG, HGM, and GGP

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5 LSE Listed Gold Stocks In Investors’ Bucket- POLY, CEY, POG, HGM, and GGP

 5 LSE Listed Gold Stocks In Investors’ Bucket- POLY, CEY, POG, HGM, and GGP

According to the International Monetary Fund (IMF), the catastrophic effect of coronavirus-induced lockdown could lead to a deep economic crisis, much worse than the financial crisis of 2008. The organisation has projected the growth of global economy to contract by 3 per cent in 2020 due to the coronavirus pandemic.

Over the recent financial market crash led by the pandemic, investors had been drained out financially as well as emotionally. Gold investments are considered as safe havens in these crucial times. It has been historically considered as a secure method of storing value when there is a high degree of uncertainty hovering around the economic landscape. When a gold as a commodity moves higher, the gold stocks tend to gain momentum posting higher returns. Therefore, many investors plan to make investments in gold by investing in these stocks.

Why invest in Gold stocks?

Gold stocks are a preferred choice of investors who are willing to bet on rising gold price with gold hitting 7 years high since November 2012. Investing in gold has mostly been rewarding, however, sometimes can be riskier. If the economic fallout due to the Covid-19 continues to end up being worse than expected, the lustre of this yellow metal is expected to attract greater attention from investors. However, the stock market has improved over the last couple of weeks but that has not really stopped the surge in gold prices.

The global economy has changed drastically in the last ninety days due to the outbreak of epidemic coronavirus that has now spread to over 185 countries. Millions of people have lost their jobs and the interest rates have reduced around the world, causing the US dollar to weaken. Traditionally, this sought of pressure has always helped gold. Industry experts fear that by the end of this year, inflation might start to creep in. As nothing can be said about how the economy would perform after the lockdown is uplifted, people could consider gold to park their money. The world economy has gone through various recession cycles. Historically, as the world goes through recession, gold prices go higher, reflecting the inverse relationship between them. Many experts believe that this surge in gold prices is demand driven.

(Source: Thomson Reuters)

The pandemic started to spread from January in most countries. In the above chart, the Gold/ Silver index has outperformed the FTSE 100 in the last three months. Here, we would discuss the overview of businesses of some of the UK gold stocks quoted on the London Stock Exchange based on their market capitalisation, price returns/ dividend yields.

Large & Mid Cap Gold miners

  • Polymetal International Plc

Polymetal International Plc (LON: POLY) is a Cyprus-based organisation and a worldwide leader in valuable metal mining. The organisation has a wide range of portfolio of gold and silver producing assets along with the greenfield and brownfield exploration programs across Russia.

The FTSE 100 miner’s revenue surged by 19 per cent to US$2,246 million in the fiscal year 2019 from US$1,882 million in the fiscal year 2018. The gold sales of the company surged by 14 per cent on a year-on-year basis. The company managed to reduce its net debt to US$ 1,479 million this year in comparison to US$ 1,520 million in 2018.

The FTSE 100 listed company, with ticker symbol “POLY”, has been trading on LSE at a stock price of GBX 1,666.00, up 1.22 per cent or GBX 20.00, as at 30 April 2020 (11:24 AM GMT). Stock’s 52 weeks High and Low stand at GBX 1,728.50 and GBX 763.71, respectively.

The total M-Cap (market capitalisation) of the company while writing stood at £7.72 billion along with an annual dividend yield of 2.98 per cent. The company provided a price return of 32.21 per cent in the last three months despite the global turmoil.

  • Centamin Plc

United Kingdom-based Centamin Plc (LON: CEY) is a mining company that specialises into exploration and development of gold and other precious metals.

The FTSE 250 miner recorded solid financial performance with gross revenue of US$222.2 million in the first quarter of 2020, reflecting an 8 per cent growth on year-on-year basis. The company recorded a gold sales of 139,784 ounces at a realised price (average) of US$1,587 per ounce. The mining company declared an interim dividend per share of 6 US cents. The Company reported a robust balance sheet backed by the cash and liquid assets.

The FTSE 250 listed group, with ticker symbol “CEY” has been trading at GBX 159.55, down 1.81 per cent or GBX 2.95 as at 30 April 2020, (11:30 AM GMT). Stock’s 52 weeks High and Low are GBX 174.15 and GBX 83.32, respectively.

The total M-Cap (market capitalisation) of the company while writing stood at £1.87 billion along with an annual dividend yield of 3.96 per cent. The company provided a price return of nearly 26 per cent in the last three months.

  • Petropavlovsk Plc

London-registered, Petropavlovsk Plc (LON: POG) is one of the major gold mining companies with mines in Russia. In the financial year 2019, the company’s gold sales increased by 39 per cent to 514,000 oz as compared to 369,800 oz in the fiscal year 2018. The company’s own mined production of gold increased by 28 per cent to 471,600 oz of the total FY 2019 sales amount as compared to FY2018.

The FTSE 250 listed group, with ticker symbol “POG” has been trading at GBX 25.25, up 1.00 per cent or GBX 0.25, as at 30 April 2020 (11:43 AM GMT). Stock’s 52 weeks High and Low are GBX 27.49 and GBX 7.90, respectively.

The total M-Cap (market capitalisation) of the company stood at £824.70 million. The company provided a price return of 43.8 per cent in the last three months of global meltdown.

Small Cap Gold miners

  • Highland Gold Mining Ltd

Highland Gold Mining Limited (LON: HGM) is an AIM-listed gold mining company having major assets in Russia and Central Asia. The company’s total gold and gold equivalent production was slightly above the guidance range of 290,000-300,000 oz, increased by 12 per cent to 300,704 ounces during the fiscal year 2019. The company’s EBITDA increased by 34 per cent to US$205.1 million during 2019. The Board of the company recently declared a third interim dividend of GBP 0.035 per share.

The AIM listed group, with ticker symbol “HGM” has been trading at GBX 243.20, up 1.67 per cent or GBX 4.00, as at 30 April 2020 (11:54 AM GMT). Stock’s 52 weeks High/Low are GBX 257.20 /GBX 150.

The total M-Cap (market capitalisation) of the company while writing stood at £867.44 million along with an annual dividend yield of 5.64 per cent. The company provided a price return of 21.18 per cent in the last three months

  • Greatland Gold Plc

London-headquartered, Greatland Gold Plc (LON: GGP) is a mineral exploration and mining company, primarily focused on gold. The company achieved high-grade results from Newcrest drilling majorly conducted last year. The company confirmed its strong financial position to continue its Paterson exploration programmes in 2020 with cash and cash equivalents of more than £4 million as at 31 December 2019.

The AIM listed group, with ticker symbol “GGP” has been trading at GBX 8.40, down 5.82 per cent or GBX 0.52, as at 30 April 2020 (11:59 AM GMT). Stock’s 52 weeks High/Low are GBX 9.50/GBX 1.45.

The total M-Cap (market capitalisation) of the company while writing stood at £325.98 million. The company provided a price return of nearly 206 per cent in the last three months despite the disruption caused by the novel coronavirus.

However, it’s important to note that investment in gold stocks need to go through a prudent process which could factor in the havoc caused by the pandemic and other risks associated with the nature of business as gold stocks could be highly volatile sometimes. This also implies that gold stocks might not always respond to the gold prices in the market given the several long-term and short-term uncertainties prevailing in the mining sector business.

In this unseen and unprecedented crisis, while gold related assets could be the right option to park your money, diversification seems to be the need of the hour when it comes to portfolio allocation.

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