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GoldCorp: Book Value Buy

08/26/2015 7:00 am EST


Mark Skousen

Editor, Forecasts & Strategies, High-Income Alert

The only fast money right now is in gold, asserts Mark Skousen, editor of Fast Money Alert.

With the Chinese stock market collapsing, there is growing fear that the Fed and other central banks around the world will need to stimulate the economy and pump more fiat money into the system.

The latest Fed release suggests that the United States may postpone an interest-rate hike in the fall, a possibility I have predicted for some time.

That’s good news for gold and gold stocks, which have begun a significant rally in August.

Indeed, August is traditionally a good month for mining stocks. One in particular that should continue to do well into September is Goldcorp (GG).

The Vancouver-based mining company has properties in Canada, the United States, Mexico, and Central and South America.

Goldcorp has increased its revenues and earnings in the past year. Earnings more than doubled to $1.3 billion on $3.9 billion in revenues.

It also has enjoyed significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago.

The company has demonstrated a pattern of positive earnings per share growth during the past year. This trend should continue.

With $1 billion in cash on hand, GG also should be able to handle its debt of $3.5 billion. It has cut its dividend for now in response to lower gold prices in the past three years.

It is selling below its book value of $20 a share. Let’s buy Goldcorp at market today and set a protective stop of $12.50.

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