We recently compiled a list of the 12 Stocks Under $5 With Biggest Upside Potential. In this article, we are going to take a look at where NovaGold Resources Inc. (NYSEAMERICAN:NG) stands against other stocks under $5 with biggest upside potential.
On January 20, Bloomberg reported that relief swept through the markets as it became clear that Donald Trump would not immediately impose China-specific tariffs on his first day in office, sparking a rally in US equity futures and a decline in the dollar. According to people familiar with the plans, the Trump administration is pivoting towards a more engagement-oriented approach with Beijing, rather than pursuing another trade war. The administration also plans to issue a memorandum directing federal agencies to study existing trade policies and relationships with China, Canada, and Mexico, rather than imposing new tariffs.
This change in strategy has been welcomed by investors, who were concerned that a trade war with China could have significant negative consequences for the global economy. The relief has propelled US equity futures higher, with contracts on the S&P 500 rising 0.5%. The dollar, on the other hand, slumped, with a gauge of the dollar dropping as much as 1.1%. Additionally, Trump’s conversation with China’s leader Xi Jinping, which he described as “very good”, boosted Asian stocks on Monday. However, not all markets were positive, after Trump announced plans to invoke emergency powers to boost domestic energy production while shifting away from renewable sources.
Read Also: 12 Cheapest Stocks with Biggest Upside Potential and Top 10 Undervalued Tech Stocks to Buy According to Hedge Funds.
In an interview with CNBC on January 20, Stanley Druckenmiller, Chairman and CEO of Duquesne Family Office, a financial services company, shared his insights on the markets and the incoming administration. Druckenmiller began by describing the current state of the economy, noting that the United States is experiencing a very low unemployment rate of around 4% and a strong GDP growth rate of 3%. He mentioned that, in his 49 years of experience, the country is likely transitioning from the most anti-business administration to the opposite, which has led to a significant shift in business confidence.
According to Druckenmiller, CEOs are feeling “somewhere between relieved and giddy” about the change in administration. He cited a recent statement by Paul Ryan that discussed a 32% increase in business confidence over the last 12 months, which Druckenmiller believed was likely a record. This surge in confidence, combined with the strong economic indicators, suggests that the economy will remain robust for at least the next six months. Druckenmiller’s firm is a believer in the concept of “animal spirits,” which refers to the idea that business confidence and sentiment can have a significant impact on economic activity.
Despite the positive economic indicators, Druckenmiller noted that the earnings yield to bond yield is at its most unattractive level in 20 years. This means that the return on investment in stocks is relatively low compared to the return on bonds, which could make it challenging for the market to continue its upward trend. As a result, Druckenmiller is cautious in his predictions, citing the push and pull between a strong economy and rising bond yields. He acknowledged that every change creates opportunities for price changes, and the radical shift in administration, combined with innovation and deregulation, could lead to significant disruptions in the market.
The recent changes in trade policies and economic outlook have created a mix of challenges and opportunities for investors. While there are uncertainties, the overall sentiment in the market remains positive with room for growth.
An aerial view of a gold mining claim in the Kuskokwim region of southwestern Alaska.
Our Methodology
To compile our list of the 12 stocks under $5 with biggest upside potential, we used Finviz and Yahoo stock screeners to find the 30 largest companies trading under $5 as of January 17. From that list, we narrowed our choices to the 12 stocks that analysts see the most upside to. We also included their stock price as of January 17 and their hedge fund sentiment, which was taken from Insider Monkey’s Hedge Fund database of 900 elite hedge funds as of Q3 of 2024. The list is sorted in ascending order of analysts’ average upside potential as of January 17.
Why do we care about what hedge funds do? The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
NovaGold Resources Inc. (NYSEAMERICAN:NG)
Upside Potential: 116.46%
Stock Price as of January 17: $3.28
Number of Hedge Fund Investors: 13
NovaGold Resources Inc. (NYSEAMERICAN:NG) is a leading gold exploration and development company with a primary focus on the Donlin Gold Project in Alaska, which is one of the largest and highest-grade undeveloped gold deposits in the world. The company operates this project in partnership with Barrick Gold and aims to establish a profitable mining operation.
NovaGold Resources Inc. (NYSEAMERICAN:NG) is actively advancing the Donlin Gold Project through a series of strategic initiatives aimed at optimizing the project’s development and maximizing its long-term value. One of the key areas of focus is the ongoing update of the resource model, which is nearing completion and will provide a more accurate and detailed understanding of the project’s potential. Another critical aspect of the project’s advancement is the Dam Safety certification, a mandatory requirement for the construction and operation of the tailings dam and related water retention structures. NovaGold Resources Inc. (NYSEAMERICAN:NG) has submitted the majority of the preliminary design packages to the Alaska Department of Natural Resources and anticipates receiving feedback and approval in the coming months.
Additionally, NovaGold Resources Inc. (NYSEAMERICAN:NG) has made significant progress in metallurgical testing at a pilot plant in Ontario, Canada, aimed at validating optimizations to the flow sheet. This work is expected to provide valuable insights that will guide the project’s future development.
Overall NG ranks 7th on our list of the stocks under $5 with biggest upside potential. While we acknowledge the potential of NG as an investment, our conviction lies in the belief that AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is more promising than NG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.