Our favorite speculative play for several years has been IAMGOLD Corporation (IAG), a gold exploration and mining company with mines in North American, South America and in West Africa, suggests Alan Newman, market strategist and editor of Crosscurrents.
The company’s headquarters are in Toronto, Canada and the firm has interests in at least ten operations that we are aware of, including copper and silver. The shares traded as high as $23.88 in September 2011, in concert with the peak in bullion prices over $1900 per ounce.
Since our long-term forecast places gold eventually as high as $3000 to $3500 per ounce, we believe IAMGOLD has the potential to trade above the 2011 highs, possibly well beyond. Although we consider the shares to be speculative, valuations appear to be reasonable.
The shares currently trade at roughly a 1.5 price to sales ratio and the forward price to earnings ratio is about 26. Total cash per share is $1.53 while total debt per shares is $0.89.
IAMGOLD rallied from similar levels in March 2017, almost doubling to as high as $7.22 in September 2017, despite bullion rising only modestly by 3%, thus there is potential for investors and speculators to drive interest regardless of the action in the precious metal.
However, there have been some hiccups along the way. Most recently, IAMGOLD traded as low as $2.85 last November and has rallied since but likely faces some resistance above $4 per share.
We have some reservations about management, but our long-term forecast for gold bullion alone should be capable of driving the stock's value over the long term.
