Hochschild Mining (LSE: HOC) is one company that has seen its share price retreat in response to this fall, a drop that’s been driven primarily by a pick-up in the US dollar (a development which of course makes the greenback-denominated commodity more expensive to buy).

But as I’ve explained before, there remains plenty of geopolitical and macroeconomic uncertainty out there that could play havoc with risk appetite and supercharge gold demand again. It’s the reason why UBS for one is predicting bullion prices will charge through the $1,400 per ounce milestone within the next 12 months.

Current forecasts suggest Hochschild will deliver earnings rises of 63% and 36% in 2019 and 2020, respectively, figures which leave it dealing on a forward PEG reading of just 0.5 (comfortably below the accepted bargain watermark of 1). Such a low valuation makes the digger a brilliant buy today, and particularly given the prospect of a fresh metal price surge.

10%-plus dividend yields

A dirt-cheap price also makes Bovis Homes (LSE: BVS) a great buy today. Right now it carries a prospective P/E multiple below the widely-regarded bargain benchmark of 10 times, at 9.2 times.

The housebuilder has seen its share price retrace 16% from the 2019 peaks hit in early March, reflecting growing market fears over the Brexit process and how this will impact property prices in the near term and beyond. Yet all the evidence from Bovis and its peers suggest the market remains as robust as ever.

Just last week, chief executive of the FTSE  250 firm Greg Fitzgerald lauded “[the] strong period of trading” since the start of the year, a timeframe in which the average private sales rate per site boomed 17% year-on-year to 0.61 and the company continued to report a “strong forward sales position.”

It’s no wonder that City analysts expect the firm to keep increasing profits through the next couple of years at least, helped by Bovis’s drive to boost build rates and the steps it’s taking to reduce margins too.

A final sweetener. Right now the company sports gigantic dividend yields of 10.3% and 10.7% for 2019 and 2020, respectively.

Value + dividends

Bakkavor Group’s (LSE: BAKK) share price may have remained unmoved since I last covered it at the end of April, but trading at the firm has been solid enough despite the persistence of poor shopper confidence and inflationary stresses in the UK.

News last week that the fresh food producer’s trading has been in line with expectations since the start of the year may not be enough to merit fireworks. But it’s further sign the company is still showing green shoots of recovery.

City analysts still expect the business to recover from an earnings dip this year by bouncing back into growth in 2020, reflecting the huge investment Bakkavor’s making in bright international marketplaces (US and China) and the massive investment it’s making elsewhere to improve its food ranges. Just this month, it purchased Blueberry Foods to bolster its desserts portfolio.

As I type, Bakkavor trades on a forward P/E ratio of 8.9 times and carries big dividend yields of 4.6% for this year, and 5% for next year too. These factors make it worthy of serious attention, in my opinion.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Here I’m running the rule over three terrific growth stocks to buy as well. Come and take a look.

In good health

Spire Healthcare Group (LSE: SPI) is a company that City brokers are predicting big things for. A 20% earnings bump is predicted for 2019, a figure that also leaves it dealing on a dirt-cheap forward P/E ratio of 9.9 times.

This figure is well inside the widely-regarded bargain benchmark of 10 times and not indicative of Spire’s exceptional profits potential as Britain’s ageing population likely drives demand for its private hospital care in the years ahead.

The business may have disappointed in mid-January when it announced that revenues growth would prove elusive in 2018, but signs of stronger trading in the second half have helped investor appetite to recover following an initial blip. And signs of further progress on this front, allied with news on its cost-reduction strategy when it announces full-year results on Thursday, February 28, could help its share price to continue rising.

A dependable earnings grower

Macfarlane Group (LSE: MACF) may not be expected to deliver the same sort of profits growth in 2019 as Spire. It’s expected to report a more modest 10% rise, but this is a projection that’s still not to be sniffed at.

Besides, the long record of earnings growth that the protective packaging giant has delivered over many years makes it worthy of attention from growth hunters. Particularly so as it deals on a prospective earnings multiple of just 11.7 times despite this pedigree.

Indeed, I reckon this low rating may give its share price licence to charge when full-year results are distributed on February 21. If November’s last update is anything to go by we could be in for a treat — back then, Macfarlane said that a sales jump of 13% during January-October meant that pre-tax profits were “well above” the levels of a year earlier.

Profits to double?

If you’re only interested in stocks predicted to report spectacular earnings growth in the near term, then Hochschild Mining (LSE: HOC) might be more to your liking.

City analysts expect the business to report a 94% earnings rise in 2019 because of the bright outlook for precious metal prices. I reckon bullion values could gain further traction in February alone as key macroeconomic and geopolitical issues, like a fresh US government shutdown and additional bickering over Brexit, threaten to blow up, a scenario that would drag the gold producers higher too.

Hochschild managed to raise production for six years on the spin, but total gold and silver output is predicted to fall this year, to 457,000 gold equivalent ounces and 37m silver equivalent ounces respectively. The long-term outlook remains robust as the Peruvian digger ramps up development of its assets like Inmaculada. In my opinion a forward PEG ratio of 0.3 times is exceptional value for a share with such compelling growth prospects.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Silver star

Hochschild Mining (LSE: HOC) may not be the flavour of the month right now, the stock sinking in June on the back of deteriorating silver values.

But I remain bullish on the company’s long-term earnings prospects despite the current weakness in commodity values as I believe the broad collection of geopolitical and macroeconomic troubles swirling around should support demand for so-called store-of-value assets like precious metals.

And in the meantime, I believe second-quarter production results scheduled for July 18 could give Hochschild’s beleaguered share price some fresh zip. The digger declared last time out that “better than expected contributions from Inmaculada and Pallancata” helped total attributable production swell to a record first-quarter total of 9.8m silver equivalent ounces, up 14% year-on-year.

Another solid result for Q2 could prompt a re-rating of the stock should the firm upgrade its full-year target of 38m attributable silver equivalent ounces.

City analysts are expecting earnings at Hochschild to detonate in the medium term, and this supports expectations of surging dividends. Last year’s payout of around 3.35 US cents per share is anticipated to rise to 3.5 cents this year and again to 4.5 cents next year.

Subsequent yields may stand at a handy-if-unspectacular 1.4% and 1.8% for 2018 and 2019 respectively. That said, the rate at which Hochschild is likely to continue growing dividends still makes it an excellent pick for income seekers today, on the back of its excellent profits outlook and fast-improving balance sheet (net debt fell 45% in 2017 to $102.8m).

The BIG yielder

Hochschild’s elevated forward P/E ratio of 31 times wouldn’t deter me from investing today, although this may prove to be rich for many investors.

Some classic value-seekers may be more interested in recruitment specialist Hays (LSE: HAS) instead, a stock which deals on a P/E ratio bang on the accepted value benchmark of 15 times (and below) for the new year beginning July.

This multiple is created by a predicted 9% earnings advance and follows a forecast 14% bottom-line improvement for the 12 months ending June 2018. What’s more, these estimates lead to predictions of even more special dividends being forked out.

Thus fiscal 2017’s 7.47p per share total payout is anticipated to rise to 7.88p in the closing period, and again to 9.6p in fiscal 2019, the latter prediction leading to a smashing 5.3% dividend yield.

As I noted when chronicling Hays’ most recent trading statement in April, the FTSE 250 giant continues to make terrific progress in foreign markets. In the first quarter, its international businesses (collectively responsible for in excess of three-quarters of total net fees) saw those net fees rise 15% year-on-year, despite tough comparatives.

I reckon another strong financial statement in the coming weeks — fourth-quarter numbers are slated for July 13 — could provide Hays’ share price with a solid boost.

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Like many across the investment community, I believe we may now be past the worst of it. But stock pickers can still protect themselves from any fresh shakes by buying up blue-chip beauties in traditionally defensive sectors.

Defence giant BAE Systems (LSE: BA) is one company I have long talked up as a canny destination for share pickers. And I reckon right now is a sound time to revisit the FTSE 100 firm’s investment case.

Packing heat

Mankind’s destructive desire to wage war upon itself is the one constant of history, meaning that demand for BAE Systems’ high-tech aeroplanes and weapons systems can always be relied upon, whatever the weather.

And arguably the geopolitical situation right now is volatile. Donald Trump and Kim Jong-un continue their war of words, Russia and China pursue their expansionist policies, and global terrorism is spiking, which means that the Footsie company’s sales outlook is stronger than it has been for many years.

But this is not the only reason to pile into the London firm today. For nervous investors, BAE Systems’ broad geographic footprint is adding an extra layer of protection to future earnings. Long-term defence spending from the company’s traditional US and UK customers is likely to remain largely robust, while lucrative contract wins keep streaming in from its clients in the Middle East.

Certainly City analysts are expecting profits at BAE Systems to continue their upward march. Last year’s predicted 6% bottom-line improvement is expected to be followed by a 2% rise in 2018. And another 6% increase is forecast for next year.

These projections mean the arms-maker is an appealing value share, the Footsie giant sporting a prospective P/E ratio of 13.2 times. However, there’s plenty for income investors to get their teeth into too, BAE Systems carrying market-beating yields of 4% and 4.1% for this year and next.

Metals mammoth

Those fearing fresh blood on the stock market floor may also want to take a close look at precious metals producer Hochschild Mining (LSE: HOC) today.

Gold and silver are of course classic rush-to-safety assets, and this is reflected in the robust buying that has kept bullion prices locked in a tight range around January’s 18-month peaks above $1,350 per ounce. A fresh weakening US dollar, a very-likely scenario given the ongoing political intrigue in Washington, would cause prices of these commodities to power higher again.

What’s more, Hochschild is stepping up production to give earnings growth an extra boost. The London-based digger, which has assets all over The Americas, produced a record 513,598 gold equivalent ounces and 37m silver equivalent ounces in 2017.

Against this backcloth, City analysts are expecting the FTSE 250 business to grind out splendid earnings expansion of 37% and 29% in 2018 and 2019 respectively. These projections also make Hochschild brilliant value for money as investors need to look past a weighty forward P/E ratio of 32.4 times and instead concentrate on a corresponding sub-1 PEG reading of 0.9.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

BLT, please

If you look beyond that and invest for the long term, the buy case is strong. Most investors should have exposure to this sector and growth monster BHP Billiton (LSE: BLT) is a good place to start. The stock is up 146% over the past two years, driven by the sector’s spectacular recovery since the January 2016 China meltdown.

BHP gives you exposure to a broad range of natural resources, including iron ore, metallurgical coal and copper, and oil and gas as well. It responded to the traumas of 2015 by slashing capex and cutting overheads, leaving it nicely positioned for the cyclical upswing. So as the oil price nudges $70, it benefits. When the copper price climbs, again, up it goes. When prices fall, it hurts.

Heavy metals

Metal prices have surged over the last year due to the weak dollar and recovering confidence in China, sending copper to a three-year high of $7,000 a metric ton, but they dipped yesterday amid signs of rising stockpiles. With the global economy growing and factory output rising, this may only be a blip.

Size matters in the commodity industry, allowing this vast £86bn group to withstand lower prices, maintain production and watch smaller rivals go to the wall. It generated free cash flow of $12.6bn in the year to 30 June, while reducing debt by 37% to $16bn. Yet it trades on a modest 13.9 times forecast earnings, with a price-to-earnings growth ratio of just 0.7. Current yield is 4.1%, covered 1.7 times. One to buy and hold as long as you possibly can. Here is another mining stock that could help you retire early.

All that glisters

Hochschild Mining (LSE: HOC) is a relative minnow with a market cap of just £1.24bn and is even more volatile. It is up an incredible 500% over two years, mostly due to a strong 2016. It is up only 5% over the past 12 months, with profits undermined by increased costs. Do not expect it to carry on four-bagging.

This morning’s production report for the year ended 31 December saw CEO Ignacio Bustamante reporting that it has “once again delivered a historic year of production with output growing for the fifth consecutive year”.

Silver machine

Total 2017 production was a record 513,598 gold equivalent ounces and 38m silver equivalent ounces, including 254,932 ounces of gold and 19.1m ounces of silver. Costs and capex for 2017 should meet expectations while the group’s financial position is “very robust“, as it completes early repayment of its bonds over the coming days. Bustamante also reported “encouraging results” across its brownfield exploration programme.

Its cash balance has also strengthened to hit $256m at 31 December, up from $140m one year earlier, net debt falling from $183m to $97m over the same period.

Hochschild’s share price is down 1.13% at time of writing. Given its forecast valuation of 38.2 times earnings, I can see why. RBC Capital recently downgraded the company due to its valuation, although it said the story remains “compelling“. Much depends on the progress of its exploration programme. However, forecast earnings per share growth of 69% in 2018 and 21% in 2019 point to a shinier future. Maybe wait for a cheaper entry point.

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Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I believe that Hochschild Mining (LSE: HOC) is a share that could be capable of delivering knockout shareholder returns.

The mining ace, which digs for precious metals across The Americas, announced this week that it chucked out record amounts of metal between July and September, with silver output clocking in at 5.3m ounces of attributable metal and gold production hitting 67,234 attributable ounces.

The company lauded a “strong performance” from its Inmaculada asset in Peru, and highlighted progress at its Pallancata site in the country which is “continuing to deliver tonnage and grades above expectations.” Group silver production in the year to date stands at an all-time peak of 28.2m ounces.

Celebrating the results, chief executive Ignacio Bustamante said: “We are firmly on track to hit our 37 million silver equivalent ounce target for the year. Costs remain under control and we can look forward to our financial position improving in the near future with good cashflow generation and a planned debt refinancing in the first quarter of next year.”

Expensive but exciting

And in other developments the FTSE 250 digger announced: “The Pablo permitting process continues as expected with no major issues encountered so far.” The environmental permit expected to be received by the close of the month, it said.

Keeping the good news rolling, Hochschild added that it is now in the middle of its brownfield exploration campaign and has seen “some encouraging results from Arcata, San Jose and also at Inmaculada.” This will come as reassuring news to investors, the company’s share price having slumped in recent months on the back of worrying exploration updates.

Those expecting booming production levels at Hochschild to translate into magnificent earnings growth right away will no doubt end up very disappointed. The company is anticipated to report a 26% earnings drop in 2017 by City brokers due to the impact of heavy exploration costs.

However, the London-based miner is expected to bounce back with an 81% bottom-line improvement in 2018. And as production levels boom, operating costs come down, and a turbulent political and economic outlook likely keeps silver investment on the boil, I reckon Hochschild could prove a very savvy buy, despite its elevated forward P/E ratio of 37.6 times.

Waste not want not

Renewi (LSE: RWI) is another FTSE 250 share I am tipping to overcome some near-term obstacles to deliver robust earnings growth in the years ahead.

In the 12 months ending March 2018, the waste-to-product specialist is expected to print a 2% bottom-line decline, although it is predicted to get firing again from next year (a 73% year-on-year earnings improvement is currently forecast for fiscal 2019).

And it is not difficult to see these numbers being upgraded in the months to come as trading conditions improve in both the UK and The Netherlands. Last month Renewi advised that “overall trading for the first half is ahead of our expectations” as improving economic growth boosted waste volumes. And it again extolled the benefits brought about by the merger of Shanks and Van Gansewinkel which completed in February.

I reckon Renewi is also worth serious attention right now even given its high forward earnings multiple of 27.5 times.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Look at Rio Tinto (LSE: RIO) for example. When Chinese demand was falling back a bit and metals and minerals were in oversupply, Rio shares plunged.

The year 2015 saw a collapse from around 3,280p in early January, to 1,640p by the beginning of 2016 — you’d have lost half of your money and would have been silly to buy when the price was falling, right?

Actually, from that low, the shares made a storming recovery and are now trading at 3,650p — helped by the firm’s ambitious share buyback programme. And if you’d carried on buying right through the down spell, you’d have hoovered up a lot of very cheap shares. 

Dividend income

On top of that, there’s a 5.6% dividend yield forecast for this year, based on the current share price — those who bought around the low point are now looking at an effective yield of more than 12%.

Admittedly, over the erratic past five years we’ve only seen an overall gain of 15%, but investing in the downturn would have boosted that, and you’d have more than 20% extra to add from dividends — and that’s really not bad during a tough period for commodities.

Earnings are still expected to be erratic, with a 69% EPS rise this year followed by a 20% drop next, and a 4.7% dividend forecast for 2018 to follow 2017’s 5.6%. 

Looking at forward P/E multiples of 10 and 12.3 for the two years, I really do see Rio Tinto as a long-term buy.

Stunning growth

One mining stock that has not had such a roller coaster two years is Hochschild Mining (LSE: HOC), with its shares having five-bagged since a low in January 2016.

Hochschild is mainly a silver miner, though it produces some gold too, and it’s nicely profitable. This year is actually expected to produce a fall in earnings per share, but an 81% spike forecast for 2018 would take care of that.

We’d still be looking at a P/E multiple of 20, mind, so to some extent an investment in Hochschild could be seen as a gamble on the price of silver.

Shiny stuff

Today the metal is selling for only around half its value of five years ago, though that is a comedown from the short-term peak of 2011-12, and over the longer term, the price does seem to be trending upwards. With silver currently at  around $17 per ounce, and with Hochschild able to produce the stuff at an all-in sustaining cost of around $12.50, any upwards movement could gear up profits nicely.

Production looks to be growing strongly, with the company having achieved record levels in the third quarter, and still on track to meet its target of 37m ounces for the full year.

Chief executive Ignacio Bustamante spoke of “good cash flow generation and a planned debt refinancing in the first quarter of next year.”

What about the dividend? Well, we should only expect a 1.3% yield this year, but that’s strongly progressive and should be up to 1.5% in 2018 — and I see that progression continuing into the long term, which could easily provide attractive effective yields on the current share price.

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Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

However, this view may not hold true in all circumstances. In some cases there may be further growth to come. Having risen 1,476% in the last five years, is this small-cap stock worth buying right now?

Positive update

Reporting on Friday was Bluejay Mining (LSE: JAY). The company is focused on advancing the Dundas Ilmenite Project in Greenland into production in 2018. It released news of the commencement of a feasibility study, with a number of advisers appointed in order for it to be completed. The final feasibility report is expected for completion during the first quarter of 2018, and it will form the final part of the exploitation licence application that is expected to be approved in the first half of next year.

Bluejay Mining has risen significantly in the last five years. Investor sentiment is increasingly positive regarding the company’s outlook. If its progress continues and it is able to start production over the medium term then further share price gains could be on the cards.

Clearly, the company remains a relatively high-risk opportunity. While its strategy and project potential appear to be sound, it is a small stock which could be highly volatile and could be the subject of profit taking should its outlook deteriorate. However, for less risk-averse investors who are seeking a small mining company with high growth potential, it could be worth a closer look.

High growth potential

Offering significant investment potential right now is gold and silver miner Hochschild (LSE: HOC). The company’s share price has disappointed in the last three months, with it falling 10%. However, it has high earnings growth potential which could catalyse investor sentiment.

For example, the company is expected to post a rise in its bottom line of 81% in the next financial year. This puts it on a price-to-earnings growth (PEG) ratio of just 0.2, which suggests that it could be worth considerably more than its current valuation. Furthermore, there is the prospect for an upgrade to its guidance since the price of gold could move higher. With uncertainty surrounding North Korea set to continue, and inflation likely to rise if US spending increases, demand for gold could increase over the medium term.

Hochschild could also become a more in-demand income stock. It currently yields just 1.3%, but with dividends due to be covered over three times by profit next year the level of shareholder payouts could increase rapidly. Therefore, with some defensive characteristics as well as high growth potential at a low price, the risk/reward outlook for the company remains favourable.

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With uncertainty growing, investors have sought safety in gold. Since the beginning of July, the price of gold has added nearly 10% thanks to steady demand, and if tensions escalate, there could be further gains to come. 

However, rather than buying gold itself, I believe gold stocks are a better option for investors seeking safety. 

Safe haven 

Unlike gold, mining stocks offer investors levered exposure to the price of gold through operating leverage. Also, unlike gold, which costs money to store, most miners offer dividends to shareholders so that you can benefit from both rising gold prices and income. 

Centamin (LSE: CEY) is a great example. Shares in this Egypt-based gold miner currently trade at a forward P/E of 17.4 and support a dividend yield of 3.3%. For the past four years, as the company’s earnings have grown and as the balance sheet has improved, the firm’s dividend payout has more than doubled. 

Last year, the company paid out regular and special dividends totalling 11.9p for a one-off dividend yield of 9.1%. The company recently announced that it was raising its interim dividend by 25% thanks to higher gold prices and cost cuts, which will push the all-in sustaining cost of gold production for 2017 down to $790/oz, compared to today’s gold price of $1,310. 

As well as producing a haven asset, Centamin could be called a safe haven company itself. At the end of the first half, the company had $333.6m in cash and bullion on hand, roughly £256m or 14% of its current market value. This cash balance should ensure that the business can remain afloat and continue to produce an income for shareholders. 

Silver margins 

If Centamin isn’t for you, Hochschild Mining (LSE: HOC) is another safe haven miner. 

Unlike its peer, Hochschild mainly produces silver, although gold is also on the menu with 121,000 ozs of the yellow metal mined during the first half of the year. 

For full-year 2017, it is targeting production of 37m equivalent silver ounces at an all-in sustaining cost of between $12.2 and $12.7/oz, so this company is more of a play on rising silver prices than Centamin. Over the past few years, as silver has traded below $20/oz, it has struggled, but now prices are heading higher the miner’s margins will expand, and it should be able to rebuild its balance sheet and improve shareholder returns. 

Shares in Hochschild currently support a dividend yield of 1.2%, which isn’t much compared to the wider market, but it’s more than you would receive from most interest-bearing accounts today. 

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Rupert Hargreaves has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. 

That said, investors still need to tread carefully. For evidence of this, just look at what’s happened to the share price of one mid-cap this morning.

Not so golden?

Gold and silver miner Hochschild Mining (LSE: HOC) has performed brilliantly for risk-tolerant investors over the last 18  months or so. When commodities dipped across the board back at the beginning of 2016, you could pick up its shares for just 40p each. Fast-forward to yesterday and the very same stock was trading at 330p.

Today, however, this great run of form has come to a grinding halt with shares falling over 15% in early trading. It would appear that the company’s latest set of interim numbers has given investors the jitters.

Although H1 revenue for the six months to the end of June was almost exactly the same as that achieved over the same period in 2016 ($341m), pre tax profit came in at $40m — far lower than the $60m achieved a year ago, thanks to higher costs.

Clearly, the message that Hochschild had delivered a “robust operational performance” wasn’t heard by the market. That’s despite the company stating that it was on track to deliver record production of 37m silver equivalent ounces in the current financial year, to continue to make progress at its Pallancata deposit once permits arrive, and to ramp up its drilling programme at several brownfield sites over the remainder of 2017. 

Safety in size

With a market cap of £1.4bn, Hochschild certainly isn’t the smallest gold miner on the market. Nevertheless, FTSE 100 constituent Randgold Resources (LSE: RRS) still towers above it. Does this make the latter a safer bet?

Quite possibly. Thanks to its relatively low break-even price, Randgold has shown an ability to remain profitable during commodity slumps — something that can’t be said for all of its listed peers. What’s more, recent Q2 and half-year results compare favourably to those issued by Hochschild this morning. 

Profit of $103m over the last quarter was 21% higher than that achieved in Q1 with half-year profits 53% greater (at $188m) than over the same period in 2016. Production levels were 16% larger than at this time last year, while total cash cost per ounce declined by 13% to $595.    

Although a valuation of 29 times forecast earnings means that shares in Randgold are undeniably pricey, they’re still cheaper to those of its smaller peer. At 2%, the forecast dividend yield is also more than double that being offered by Hochschild.

In addition to this, Randgold’s finances look in far better shape. Over the six months to the end of June, the former’s cash pile grew to just under $573m. While the $145m of cash currently on Hochschild’s balance sheet is hardly inadequate, it’s still significantly less than the $630m it had six years ago. Free cash flow per share also looks healthier at Randgold.

While the temptation to grab a ‘bargain’ can be strong, I’d be inclined to go for size and balance sheet stability when it comes to investing in this part of the market. As a result, I’ll be avoiding Hochschild.

The post Is Hochschild Mining plc a falling knife to catch after crashing 15%? appeared first on The Twelfth Magpie.

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Paul Summers has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.