3 Gold Stocks You Just Can’t Ignore: Yamana Gold Inc. (USA) (AUY)

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In November, 2012, the company partnered with Serra Pelada, which would not only enable the company to get 1.5% of gold produced by the miner in 2014 but also at a reasonable cost of $400 per ounce. The deal meant that Sandstorm would also get two third of Serra Pelada’s platinium output priced at just $200 per ounce.

Sandstorm has a whopping 43% operating margin and a cash per share of $1.21. At the moment, it doesn’t have any debt and has a market capitalization of 1.06 billion. This along with its latest investment in Premier Royalty, Serra Pelada and Mutiny Gold makes it an attractive buy.

Yamana Gold Inc. (USA) (NYSE:AUY)

The great thing about Yamana Gold is its “cost per ounce of gold,” which is one of the lowest in the industry ($201). Further, it has a dividend yield of 1.6% which has increased by 550% in the last three years. Moreover, an operating margin of 37.90% depicts its huge potential to mint significant profits in the industry. Currently, the company operates mainly in the South American region including Brazil, Chile and Argentina. According to the company, it has plans of expanding its production to other countries in 2014 in order to diversify the inherent risk involved while operating in a particular region.

Valuation

Yamana Gold is trading at a forward P/E (1yr) of 13.55x and has a PEG of 1.80. It’s yielding a dividend of 1.60%; hence, it has a PEGY of 1.66. It’s currently trading at $16.53 and has a mean target price of $23 on the sell side. Thus, it is also a hugely undervalued stock and has an upside potential of almost 39%. The bottom line is that Yamana, along with Sandstorm and Randgold, are some of the top buys in the gold industry at the moment.

The article 3 Gold Stocks You Just Can’t Ignore originally appeared on Fool.com and is written by Waqar Saif.

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