The Canadian gold industry’s second mega-deal in a little over four months has some investors taking another look at the sector, which has been lagging for years.
Earlier this week, Goldcorp Inc. announced that it would be merging with Colorado-based Newmont Mining Corp. in a US$10 billion deal that came close on the heels of Barrick Gold Corp.’s September merger with Randgold Resources Ltd.
While some may be on the lookout for the next takeover target, there are other reasons investors may be tempted jump back in, according to analysts at BMO Capital Markets, CIBC and National Bank of Canada. Here are three stocks in the sector those analysts believe could have upside going forward.
Alamos Gold Inc.
Alamos Gold Inc.’s stock was decimated in 2018, hitting a high — $8.49 — on the first market day of the year and spiralling to a low of $3.88 in mid-December. But BMO Capital Markets analyst Brian Quast sees potential for the stock.
At a recent investor day, CEO John McCluskey suggested Alamos could do a buyback to help the shares, which closed Wednesday at $5.44. The Toronto-based company, which operates two mines in Canada and another two in Mexico, also reported fourth-quarter 2018 production of 126,000 oz., surpassing Quast’s expectations of 119,000 oz., due to increased production at Island Gold, a mine in Northern Ontario.