John StephensonNewmont Mining (US)NEMTOP PICKNov 25, 2014

Great run. These are the kind of events where you sell the spike. Look at the chart -- went from $40 to $127. Gold can be a funny market. So many other things are down 30-40% and offer compelling opportunities.

Up 168% on the rising price of gold. He prefers AEM-T, but you can't go wrong with NEM.

Switched out of this name to an intermediate producer for more torque. Continues to be very bullish on gold.

Has owned it for 2 years and is one of her best performers. Given the movement in gold, NEM's EBITDA jumped 55% in Q1. 

Up 26% this year. After buying Newcrest, it became the top gold miner in the world, also mining copper, silver, zinc and lead around the world. Last month they reported a robust quarter: top and bottom line beat with stronger than expected gold production, but their full-year forecast disappointed. That's why shares sold off but have mostly recovered. Trades under 14x 2025 PE, a discount to Agnico Eagle, which is his favourite gold stock, trading at 22x PE tough boasts better growth. NEM buys back a lot of shares.

NEM/NGT is continuing to struggle with costs, which is impacting profit growth. The Newcrest acquisition is so far not working out well. EPS of 81c missed estimates of 85c. Revenue of $4.6B missed estimates of $4.69B. Newmont's adjusted Ebitda may rise by almost 30% to just over $2.5 billion amid a strong 4Q operational performance, gold output guidance of 1.8 million ounces, 7% higher vs. 3Q, and a rally in gold to more than $2,700 an ounce. This could restore some market sentiment after a disappointing 3Q and muted 2025 outlook. Contracted labor cost inflation offset synergy benefits and operational stability at some of the acquired assets, Lihir, BruceJack and Cadia, may take a bit longer to achieve vs. management's initial expectations. Cash proceeds of $1.1 billion from asset disposals, along with strong operating cashflows, may see net debt decline below $5 billion, giving the company plenty of scope to continue its share-buyback program. The company is not our favourite, and has 'screwed up' before. But it is priced well and EPS is still expected. With some better cost management it can get back on track. With the stock down sharply this week we would rate it a HOLD now, with a view to watch performance over the next six months. Still, we would be fine upon a bounce to switch it for AEM, WPM or FNV. 
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Gold is at all-time highs. Producers have prolific cashflows. Safe way to get operating leverage inherent in a producer. Biggest gold producer in the world. Most mines are in geopolitically safe locations. Only gold producer in the S&P 500, so it's the go-to name. Conservatively financed, BBB+ credit. Big share buybacks. Non-core asset divestiture. Yield is 1.8%.

He doesn't invest in gold stocks. Only 8% of gold is used in industrial products.

Bought it because he expects gold to break-out. He could be wrong. He doesn't buy many commodities. This business is managed well.