Alamos Gold options are affordably priced, to boot
The shares of Alamos Gold Inc (NYSE: AGI) are up 0.9% to trade at $11.53 this afternoon, and earlier hit a six-year high of $11.58 just a day before its second-quarter earnings report tomorrow, July 29. The equity now sports a 89.4% year-to-date lead rising in step with skyrocketing gold prices. More upside may be on the horizon for the mining stock, too, as its recent peak comes amid historically low implied volatility (IV) -- a combination that has been a bull signal in the past.
According to data from Schaeffer's Senior Quantitative Analyst Rocky White, there have been three other times in the past five years when the stock was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) sat in the 20th percentile of its annual range or lower -- as is the case with AGI's current SVI of 65.2%, which sits near the 14th percentile of its 12-month range. The data shows that one month after these signals, the mining stock was higher, averaging a one-month return of 13.7%.
From its current perch, a move of similar magnitude would put the stock just above $13, territory not seen since January 2014. It's also worth noting that AGI flashed a similar signal back in May, prior to the stock's historic breakout.
A continued surge higher could lead to a shift in analyst sentiment. Half of the brokerages in coverage rate AGI a tepid "hold," while the consensus 12-month price target of $11.14 is a 3.2% discount to its current perch.