Miners Newmont and Barrick Gold are under pressure but good alternatives in S&P

By: Motiur Rahman
Motiur Rahman
Md Motiur is a Financial Analyst at Invezz covering the North American, European and Asian stock markets. He has… read more.
on May 20, 2022
  • Newmont and Barrick Gold have posted positive YTD returns, while S&P has lost.
  • Newmont has lost 20% in a month while Barrick Gold is down by 17%.
  • Consider buying both stocks to hedge against the harsh macro-economic environment.

Year-to-date has seen many stocks trade lower on tighter macro-economic environments. S&P 500 has so far lost 17%, while the tech-heavy Nasdaq-100 is down 27%. Investors have been shifting their investments to defensive names. For this reason, mining stocks have been a haven for many investors. 

Newmont Corporation (NYSE:NEM) ranks as the largest gold miner in the world. The company has been robust so far this year and has returned 8.38% YTD. In its first-quarter earnings, Newmont posted an adjusted EPS of $0.69, below $0.69 last year.

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The earnings were also below estimates of $0.73. Sales for the quarter jumped to $3.02 billion from $2.87 billion last year. The sales missed estimates of $3.06 billion. As a result, the stock has been falling.

Barrick Gold Corporation (NYSE:GOLD) has equally countered the macroeconomic turmoil. The gold and copper miner is up 11.60% YTD. At its first-quarter earnings, Barrick booked an adjusted EPS of $0.26, down from $0.29 last year. The EPS still beat estimates of $0.24. A revenue of $2.85 billion also surpassed estimates of $2.75 billion.

Newmont and Barrick are operating in a sector least likely to be hit by the harsh macroeconomic environment. With an appetite for the precious hedge metal rising, the miners stand to benefit. As both stocks slide after the quarterly earnings, we consider it as an opportunity to buy.

Newmont and Barrick technical analysis

Source – TradingView

Technically, NEM and GOLD are going lower after touching their respective highs. We expect a further dip to the bottom of the consolidation range before both stocks pick again. NEW could slide up to $55-60, while GOLD could find support at $18.

Summary

Consider buying GOLD and NEM as both are strong inflation hedgers. The stocks have positive YTD returns compared to a drop in S&P. The stocks could fall further and can be bought lower.

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