Randgold: High Velocity Buy
The best companies attract capital and generate huge profits if you buy them when they're going up; the research over 16+ years is very clear on this asserts Keith Fitz-Gerald, editor of High Velocity Profits.
What's more, this very simple premise holds true in good conditions and bad alike, through important market turning points and even when your instincts tell you to run the other way.
Founded in 1995 and based in London, Randgold Resources Limited (GOLD) has built, financed, and now operates five gold mines in Africa. And, it's got three more on the drawing board, all of which are slated to open within the next five years.
The company posted Q3/2016 earnings last November which included a profit of $77.3 million, up 32% versus the previous quarter and up 58% compared to the same period a year ago. For the quarter, production came in at 301,163 ounces, which was up 7% quarter on quarter and in line with the previous year.
Normally, I wouldn't rely on such "ancient" history, but I'm okay with that when it comes to Randgold because we're talking about gold, which has very different pricing dynamics than regular stocks.
Case in point, those numbers hit at a total cash cost per ounce of $663, which represents a 9% decline quarter on quarter and a 5% decline over Q3/2015.
Ergo, Randgold can produce at a lower cost at a time when the spot price of gold itself is roughly $48.85, or 4.09% above the same time a year ago. That amounts to a 9.09% improvement in cost/spot price.
Not surprisingly under the circumstances, the company's Piotroski score is a very health 8 out of 9 possible points. This score consider such factors as changes in cash flow, return on assets, earnings and gross margins.
In keeping with what we know from our research, there's plenty of momentum. In fact, the company just produced a signal which tells us that it's entered a state of High Positive Velocity.