4 Gold Stocks On Our Radar

Traders have been surprisingly bearish toward these four outperforming gold stocks

Kirra Fedyszyn
Feb 10, 2017 at 3:23 PM
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Gold prices have been climbing in February -- historically a strong month for precious metals. The commodity took a breather as stocks rallied back to record highs on Thursday, but is on track to finish off the week with solid gains, and trading back above pre-Election Day levels. Nonetheless, several stocks in the outperforming gold sector are still seeing a surprising amount of bearish sentiment. Four specific names we're watching at the moment include Barrick Gold Corporation (USA) (NYSE:ABX), Yamana Gold Inc. (USA) (NYSE:AUY), Goldcorp Inc. (USA) (NYSE:GG), and AngloGold Ashanti Limited (ADR) (NYSE:AU). With earnings due next week from most of these firms, we'll take a look at how the shares are doing, and how traders and analysts are aligning on ABX, AUY, GG, and AU.

Barrick Gold Outshines the S&P

The past 12 months have seen ABX tack on 62.5% to $19.45, with the shares outperforming the broader S&P 500 Index (SPX) by nearly 23 percentage points over the last 60 days. Despite these gains, nine out of 13 brokerage firms rate the stock a "hold" or "strong sell." And while call buying on ABX has picked up lately, a large number of options traders have been placing long-term bets in the January 2018 and 2019 series. Among near-term options, meanwhile, puts have reached extreme popularity, per ABX's Schaeffer's put/call open interest ratio (SOIR) of 1.65 -- an annual peak. But this looks like a bad time to be a bear, with Barrick Gold Corporation (USA) (NYSE:ABX) due to report earnings next Wednesday. The shares have moved to the upside in the post-earnings sessions in seven of the last eight quarters, including a 6.2% climb after the company's February report last year.

Earnings Could be a Boon for Yamana Gold

AUY is also preparing to report earnings next week, with results expected Thursday afternoon. But the stock has a mixed post-earnings history, moving higher in the session after reporting in four of the last eight quarters. The shares have been fighting back from their December lows, and at $3.53, are currently in line with their Election Day close. The 20-day moving average has been an ally for AUY lately, helping the stock extend its year-over-year lead to 33.7%. But options traders are more skeptical than normal. At the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), Yamana Gold Inc. (USA) (NYSE:AUY) sports a 10-day put/call volume ratio of 0.24 -- call-heavy on an absolute basis, but ranking in the bearishly skewed 88th percentile of its annual range.

An Earnings Surprise Could Send Goldcorp Soaring

GG has been rocketing higher in recent weeks, up 42.3% from its December lows, at $16.95. That hasn't stopped options traders from buying the stock's puts, though. GG's 50-day put/call volume ratio of 1.14 at the ISE, CBOE, and PHLX ranks just 4 percentage points from a 12-month high. Of course, these pessimistic bets seem more reasonable when one considers the equity's history of post-earnings moves. GG has dropped on the charts in the session subsequent to reporting in seven of the past eight quarters, including a 12.8% tumble last February. Goldcorp Inc. (USA) (NYSE:GG) is due to report next Wednesday after the close, and even analysts seem hesitant at the moment, with nearly half rating the shares a "hold" or worse.

Short Interest, Put Buying Surges on AngloGold 

With earnings not due until later this month, it seems AU's technical performance should be at the forefront of traders' minds. After all, the shares have rallied 40% off their December bottom to trade at $13.37, with solid support from the rising 20-day moving average. Analysts appear reasonably impressed, with three out of four calling AU a "buy" or better, and not one doling out a "sell" rating. But short sellers have been hounding the stock, with these bearish bets spiking by nearly 74% during the two most recent reporting periods. Meanwhile, amid relatively light absolute volumes, options traders have shown a strong preference for AngloGold Ashanti Limited (ADR) (NYSE:AU) puts. At the ISE, CBOE, and PHLX, speculators have purchased 6.26 puts for each call over the last two weeks -- a put/call volume ratio higher than 96% of comparable readings in the past 12 months.

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