Despite many analysts suggesting to invest in gold stocks, there are some investors who suggest staying out of the gold industry because they prefer to hold a defensive strategy, waiting for the cloud of uncertainty that prevails in the financial markets to dissipate before making their next investment decision.
One of these investors is Vince Lanci, the owner of Echobay Partners LCC, a private fund management company, and fund manager with several years of investing experience in precious metals and energy.
Lanci said to Kitco.com that he “wouldn’t be surprised to see gold spike if there is a black swan following President-elect Donald Trump’s inauguration in January.”
For the whole first quarter of 2017, Lanci is investing 100% cash.
Good buying opportunities in the broader industry of metal mining stocks other than gold, according to Lanci, are BHP Billiton Ltd. (BHP, Financial), Vale SA (VALE, Financial) and Rio Tinto PLC (RIO, Financial).
Year to date, BHP Billiton, Vale and Rio Tinto have gained 43%, 150% and 37%.
BHP Billiton is trading at $36.26, down one cent or -0.01% from the previous trading day. The analysts’ average target price is $38.30 per share.
The company operates copper, iron ore, coal and nickel assets in Australia, Canada, Chile, Peru, the United States, Colombia and Brazil. The company is also engaged in oil and gas operations in the U.S., Australia and Trinidad and Tobago.
The company has a market capitalization of $102.93 billion and a total of 5.32 billion shares outstanding. The number of shares that can be traded on the stock market is 1.6 billion.
Among the top institutional holders, Bank of America Corp. has 3,545,946 shares valued at $122,867,035, Dimensional Fund Advisors LP holds 3,447,265 shares valued at $119,447,739 and CI Investments Inc. holds 2,121,600 shares valued at $73,513,444, as of the most recent quarter.
During the third quarter, Ken Heebner (Trades, Portfolio) opened a position in BHP Billiton, buying 1,200,000 shares.
The company had approximately $10.4 billion in cash on hand and the total debt amounted to $38.19 billion.
The company is trading at 1.78 times its book value and at 10.83 times its Ebitda. As of today, analysts suggest to buy shares of BHP Billiton and the recommendation rating is 1.8.
Vale SA is trading at $7.73 on the New York Stock Exchange, down 18 cents (or -2.23%) from the previous close. The analysts’ average price target is $8.17, representing a 5.7% upside in the current share price.
The company holds a diversified portfolio ranging from mining to logistics, energy and steel making. However, the main activity of the company is mining. The company is the world’s largest iron ore and nickel producer with operations in Brazil, Oman and China.
Nickel mines and operations are run by the company in Brazil, Canada, Indonesia and New Caledonia. Vale also has refineries in China, South Korea, Japan, the U.K. and Taiwan, which are either fully-owned or held in joint ventures with other companies.
The company has a market capitalization of $36.21 billion and a volume of 5.15 billion shares outstanding, of which approximately 61% is float.
Among the top institutional holders, Aberdeen Asset Management PLC stands out with 56,671,937 shares valued at $311,695,653.
During the third quarter, Ken Heebner (Trades, Portfolio) increased his position in Vale by 32.86%, while Charles Brandes (Trades, Portfolio) sold out.
The company has $5.44 billion in cash on hand as of the most recent quarter. The total debt amounted to $32.57 billion.
Vale is trading at 1.02 times its book value and at 7.36 times its Ebitda. Sixteen analysts out of a total of 25 suggest to hold this stock and the recommendation rating is 3 out of 5.
Rio Tinto is trading at $38.92 per share, up one cent or 0.04% from the prior close. The analysts’ average price target is $43.72. Analysts forecast a 12.3% rise from the current share price.
The company’s portfolio of activities is highly diversified, with copper, diamonds, aluminium, iron ore, energy and mineral assets all over the world.
Rio Tinto has a market capitalization of $70.67 billion and 1.8 billion shares outstanding. The amount of shares that can be traded on the stock market is approximately 1.6 billion.
Franklin Resources Inc. is the top institutional investor, holding 22,805,657 shares valued at $761,708,989 as of Sept. 30.
Ken Heebner (Trades, Portfolio) opened a position in Rio Tinto in the third quarter. He bought 750 thousand shares. Barrow, Hanley, Mewhinney & Strauss and David Dreman (Trades, Portfolio) reduced their positions by 1.82% and 1.58%.
The company had $8.38 billion in cash on hand and the total debt amounted to $21.34 billion.
Analysts strongly recommend to buy shares of Rio Tinto.
Source: Yahoo Finance
Rio Tinto is trading at 1.86 times its book value and at 9.81 times its Ebitda.
In addition, gold for immediate delivery closed the year at $1159.10 per troy ounce on the London Bullion Market. The precious metal gained $13.2 per troy ounce (or 1.15%) from yesterday’s close.
Disclosure: I have no positions in any stock mentioned in this article.
