News – AU – Contrarian Investors: Is Barrick Gold Stock Now Well Oversold?


Andrew Walker | 22nd February 2021 | More on: GOLD ABX

The surge in stock prices over the past few months has pushed the TSX index to new highs, however, some top stocks have fallen out of favor and should be contrary buys right now Let’s take a look at Barrick Gold (TSX: ABX) stock (NYSE: GOLD) to find out why it matches the description

Warren Buffett’s Berkshire Hathaway just announced that it had sold its stake in Barrick Gold in late 2020. News hit Barrick Gold’s stock price last week, but the fact that Warren Buffett bought the stock in the first place is a vote of confidence for Barrick’s position in the industry

The gold miner was nearly knocked down by $ 12 billion in debt a few years ago and is currently out of net debt. Barrick Gold’s transition to a leaner company focused on high-yielding assets and strong free cash flow is ongoing continue The company recently reported solid results for the fourth quarter of 2020 and the full year

Strong gold and copper prices boosted sales and increased free cash flow to $ 1 billion in the fourth and third quarters, $ 4 billion for the year Barrick Gold continues to divest non-core assets as it streamlines operations

The total cost of gold for 2020 was $ 967 per ounce at the current gold price near $ 1Barrick Gold generates a significant cash flow

at $ 800
On the copper side, the metal just hit a nine-year high of $ 4 a pound. Barrick Gold’s total cost of copper for 2020 was $ 2 a pound, so the division will do well in 2021

The board of directors has tripled the dividend since 2018 and has plans for a special return on capital to shareholders of 750 million Announced quarterly payout is $ 0.90 per share The special dividend is $ 042 per share divided over three payments in 2021

The rise of Bitcoin is viewed by some experts as a threat to gold. Time will tell if this theory is true, but gold will not lose its place as a safe investment or hedge against inflation

The correlation between Bitcoin price and gold price is worth watching.As Bitcoin spiked in late 2017, gold fell, suggesting gold investors were shifting funds towards cryptocurrency Bitcoin’s recent meteor shower could have the same impact

At the time of writing, Barrick Gold stock is trading near $ 25, compared to $ 40 in September The sell-off seems excessive given the continued strength of the gold market and the company’s ability to generate significant free cash flow to generate

While copper is a smaller part of the picture, the division will see big returns over the next few years, with copper demand likely to increase due to massive fiscal stimulus measures for industries that consume significant amounts of the metal, which includes electric vehicles, solar panels and wind turbines, which reflects the copper opportunity may not be fully reflected right now when it comes to Barrick Gold’s share price

Expect continued volatility, but Barrick Gold looks cheap at this level and deserves to be on your radar for a contrary portfolio

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The Motley Fool owns shares of and recommends Berkshire Hathaway (B shares) and recommends the following options: short January 2023 bets $ 200 on Berkshire Hathaway (B shares), short March 2021 $ 225 calls on Berkshire Hathaway (B Shares) and long January 2023 $ 200 calls to Berkshire Hathaway (B shares) fool player Andrew Walker has no position in any of the stocks mentioned

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News – AU – Contrarian Investors: Is the Barrick Gold share now heavily oversold?
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