Are Analysts Optimistic about Miners?

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May. 21 2018, Updated 9:35 a.m. ET

Looking at target prices

Despite the ongoing slump in the precious metals market, it seems that there could be hope going forward. The price targets of Wall Street analysts have portrayed some silent optimism.

The four precious metal mining companies that we are discussing here include Yamana Gold (AUY), Barrick Gold (ABX), AngloGold Ashanti (AU), and Hecla Mining (HL). The analyst stock target prices of all these stocks are relatively high, suggesting a positive outlook. Also, the number of “buy” recommendations for each stock exceeds the “sell” recommendations considerably, which further indicates that there could be more sunshine for these companies ahead.

The “buy” recommendations also outnumber the “hold” recommendations. There could be more value hidden in these miners than the current statistics suggest.

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Relative strength index scores

A stock’s RSI score indicates whether it’s overbought or underbought. An RSI over 70 suggests that a stock could be overbought and that its price could fall. A score below 30 indicates that a stock could be oversold and that its price could rise. AUY, ABX, AU, and HL have RSI scores of 37.5, 40.9, 42.3, and 35.5, respectively.

The returns of these four stocks have been weak in the last month. AUY, ABX, AU, and HL have losses of 8.9%, 1.2%, 5.8%, and 4.9%, respectively, on a 30-day trailing basis.

Some gold and silver following funds that could also present a good opportunity are the Vanguard Precious Metals and the Mining Fund Investor Shares (VGPMX) and the VelocityShares 3x Long Gold ETN (UGLD).

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