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Why you should always build a DCF Model

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Within the investing community there is a lot of hate for DCF models. Many say there are too many inputs – leaving the investor an output that is unpredictable and inherently false. Others say there is too much uncertainly embedded into a model that they are, basically, a waste of time. Finally, and this is my opinion, people are lazy and resort to a simpler method of analyzing the future value of an asset such as a multiple expansion approach.

While I wholly agree that your model is likely to be wrong 99% of the time, I believe that DCF models are a valuable tool for a research analyst. And let me take a minute to be honest. When I first started as an amateur investor, I completely ignored DCF models – resorting to a much simpler valuation approach such as multiple expansion or relative valuation. However, as I have progressed as a researcher, I now use a DCF approach for any asset that I am valuing.

So, what is so good about a DCF model? Well first they make you think like a businessman. DCF models are complex and make you think outside of the typical relative multiple expansion approach; example, “Oh Apple is trading at 10x EV/EBIT and Google is trading at 15x EV/EBIT, so that means Apple has 50% upside based on a relative expansion to Google’s 15x”.

Using a relative multiple expansion is an amateur or purely lazy way to defend the valuation of an asset you are analyzing. A DCF model on the other hand is not only more professional but makes for a better valuation case – and allows the researcher to think outside of the box.

For an example, when you are building a DCF model a few inputs into the DCF are capex, depreciation and working capital. Blindly putting random numbers into the three former inputs is the basis of garbage in, garbage out. To not allow the garbage in, garbage out mindset to take hold, you need to intuitively think like a businessman on what the specific asset you are analyzing will need going forward in terms of capex, depreciation and working capital.

It’s tough to do. If you are analyzing a cement company for example, how will you know what capex rate they will have for the next year, or even 5 years out? How are you going to know if they are planning to ramp up on a big project for future growth? How will you know what your inputs will be?

To know these inputs, you are forced to think like you are the owner of that specific asset that you are analyzing. If you were the man in charge of the cement company, how much would you spend in capex per year? How would you measure D&A after a $25 million capex spend? How much working capital will you need per every $100 million in revenues? I’m not sure of those answers. But if I were to buy shares in a cement company I would want to have some well thought out, well researched answer to those questions. There is no way I would dump 10% of my wealth in a company if I didn’t know an educated guess to those answers.

Even better, when you are building a DCF model and do not know how much an asset will need in capex per year, this directs the course of your call with management in a more quantitative approach – building a DCF model forces you to ask the right questions!

I think a lot of investors don’t ask the right questions on a management call. It’s tricky knowing what to ask in a 30 minute to 1-hour call. I have found the best way to maximize your time and managements time is to know the right questions to ask. Building a DCF model will help with preparing these questions. If you are modeling a lemon farm and not sure what the cost to plant one acre is, ask management.

Finally building a DCF model is more professional and allows you to not rely on amateur valuation methods such as relative valuation and multiple expansion. The irony of using multiples is simple. Multiples are a simplified version of a DCF – they are everything that is in a DCF but put into a simple multiple for lazy investors. The only way to properly value a business is through its future cash flows discounted at certain rate. Using a relative approach doesn’t allow deep thinking into cash flows and disregards all fundamental drivers of a business. And what’s worse, multiple valuation is used by the majority of investors to value a business. Maybe this is why the majority of investors have average returns?

If you are currently not using a DCF approach to your valuation process, I highly suggest you change your method of valuation. A DCF allows you to think like a businessman a DCF forces you to think deeply into the economic drivers of a business’s cash flow, and a DCF is much more professional than a relative or multiple expansion approach. DCF’s are tricky and your model will not be accurate. However, building a DCF model for every asset you analyze will improve your valuation skills and take you to the next level of professionalism in investing.

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Pumped Penny Stocks: Expect the Worst and Avoid Disappointment

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There are so many pumped penny stocks right now. And I love it!

Though recently I’ve come out pretty hard against these stocks that spiked big. Like MicroVision, Inc. (NASDAQ: MVIS) — it went from 25 cents up to $1.80.

AgEagle Aerial Systems, Inc. (NYSE: UAVS) spiked up from 60 cents to $5! And Remark Holdings, Inc. (NASDAQ: MARK) went from 37 cents to $2.60.

All these stocks are well off their highs now.

And these stocks all have something in common: they’re all crap. They crashed just like every other pumped penny stock I’ve ever seen.

Don’t get me wrong, there’s money to be made on all these — that’s why I love them. But are these the type of companies I’m willing to invest in for the long term? Nope, I won’t hold these for more than a few hours max.

But they’re great examples of…

Why I Love Penny Stocks!

© 2020 Millionaire Media, LLC

I’ve made over $5 million trading penny stocks over the past 20 years.** How? I trade by a set of rules. And I focus on trading smart, so I don’t get attached to any particular company or technology.

I’ve traded penny stock pumps for years. This market is no different.

On all these stocks, I went long. I bought UAVS in the $0.80s and sold for measly gains.

With MARK, I bought around 40 cents and sold around 42 cents … It just didn’t spike. On my MVIS trade, I bought in the $0.30s and sold in the $0.40s. It didn’t spike either.

I was on the right track with all of them but missed the giant runups. That’s OK.

The style that I trade — and teach — is to take small consistent profits. The big Wall Street traders love to hate on penny stocks. They say there’s not enough money to be made.

I disagree. I think there’s more than enough for traders like me or anyone with a small account.

Tim Grittani** started with a $1,500 account. He studied and worked his butt off to turn that into over $11 million. It’s more than enough.

Don’t let anyone tell you there isn’t money in penny stocks. But don’t let anyone convince you to invest in penny stocks long term either.

(**Results aren’t typical. Most traders lose money. Always do your due diligence and remember trading is risky … never risk more than you can afford.)

The key to this niche is to…

Understand Why Penny Stocks Move

Stock pumps can take place in a lot of different ways. Back in the day, it was mailers and phone calls. Now it’s mostly on social media.

The methods may be different, but the patterns and the end results are the same.

So pumps are now mostly people getting on Twitter and plugging these junk companies. They say how great these companies are … They’ll mention all these upcoming great deals with big companies.

The rumor of a deal can be a great catalyst. ‘Buy the rumor, sell the news’ can be a strong strategy, depending on the stock. But you have to understand the catalyst is only one piece of the puzzle.

And too often, the information is unreliable — especially if it’s coming from an email or social media post.

I trade these stocks, but I never hold for long. And I never believe any of the lies the pumpers are telling me.

And I use seven indicators when evaluating a trade. Check out my “Trader Checklist Part Deux” to learn what I check for before every single trade.

I say this all the time, but I’ll repeat it again. You have to…

Learn From the Past

© 2020 Millionaire Media, LLC

Penny stocks are super hot, ever since the coronavirus pandemic crashed the overall market. It’s a lot like the cannabis mania from a few years ago.

The vast majority of these penny stock pumps will come crashing back down to earth.

In 2018, pot stocks were surging. Everyone was saying pot would take over, and that all these companies would do amazing things.

But look at pot stocks now. They went nowhere — all the stocks crashed.

So, yeah, I love that these stocks are running. But don’t think it’s based on fundamentals.

I want you to understand right now that you have to be super careful with who you trust.

Here’s a video where I share some stories from people who learned the hard way. Learn from their mistakes. Never believe the stories about pumped penny stocks.

How Can You Find Pumped Penny Stocks?

I use the StocksToTrade social media search tool to look for stock pumps. It’s beautiful — I don’t have to look anywhere else. I used to have to comb through so many resources to find the next pump.

You can filter stocks by price, float, and volume. Always make sure there’s enough volume. I prefer to look for at least one million shares. It’s not an exact science. You may need to look at the dollar volume too, depending on the stock. That all feeds back in the Sykes Sliding Scale I cover in the “Trader Checklist Part Deux.”

All the stocks I mention in this post were trading millions of shares. Now, here’s a question I hear a lot…

(Quick disclaimer: I helped design, develop and have a financial interest in StocksToTrade.)

Should I Invest in Penny Stocks?

I’m going to refer you back to that weed stock article.

But here’s my short answer: learn to trade. Learn how to ride the momentum of these pumps like MVIS, MARK, and UAVS. And know when to get out.

I’m coming out against them now after they already surged five, seven, and 10 times. The pumpers say they’re up due the fundamentals. I’ve been pretty hardcore that they’re not up due to fundamentals.

watchlist banner

Now, I don’t know if these people pushing these stocks’ fundamentals are getting paid — I don’t care. I don’t know if they’re talking to each other and coordinating. Again, I don’t care.

All I care about is the price action. Pumped stocks can surge, but they’re also bound to crash. It doesn’t matter if their ‘revolutionary’ technology is a success.

In my 20+ years of experience, I’ve watched most penny stocks fail.

People ask me, “How can you be so sure?” Obviously, I can be wrong. I can be wrong on any trade.

That’s why I’m always prepared to be wrong. When any trade starts to go against me. I cut my losses — that’s rule #1 — and get out of the trade.

Never hold and hope. Always trade according to a strategy. Hope is not a strategy, and…

Don’t Believe the Hype

tim sykes in hawaii with laptop
© 2020 Millionaire Media, LLC

I go with the odds. And the odds are that these technologies and companies aren’t going anywhere. Odds are they won’t be the next superstar.

MVIS, UAVS, and MARK got tons of hype. Let’s check out what happened with these stocks.

There was a rumor that Microsoft Corporation (NASDAQ: MSFT) was buying MVIS out for $10 a share. But that never came to fruition.

UAVS was supposed to be working with Amazon.com, Inc. (NASDAQ: AMZN) on a big deal. Instead, the CEO resigned.

MARK delayed its quarterly filings. But everyone expected a press release with big news.

Maybe these companies have deals with big companies. Maybe they’re giving free samples to big companies.

The truth is, we don’t know.

The old adage on Wall Street is ‘buy the rumor, sell the news.’ That’s almost what happened here … but no real news ever came.

Which is why you should always…

Expect the Worst From Pumped Penny Stocks

I say expect the worst out of every company, and you’ll never be disappointed.

Yes, that’s a cynical approach. Not every company is trash. And you can miss out on some of the big runups.

But it’s impossible to tell the real from the fake — so I play it safe. And I assume that most of these companies are complete trash and will fail.

Never trust a pumped penny stock.

This mindset could potentially protect you from losing a big chunk of your account on a single trade. And along the way, you must take small profits, cut your losses quickly, and…

Learn From Your Mistakes

I heard horror stories from too many people, especially on UAVS. Some people held right into the conference call. Everyone was expecting a big announcement, something with AMZN.

Here’s the chart from that day:

UAVS stock chart
UAVS chart: 1-day, 1-minute candle, conference call — courtesy of StocksToTrade.com

The day started with a gap up. The price held near the high right up until the conference call at 11:00 a.m.

But the company didn’t announce any good news. Instead, the CEO resigned. Traders raced to sell and the stock went bust. After an hour-long halt from the SEC it finally reopened at $1.50, down from $3.75 before the call started.

If you were one of the bag holders, that’s OK. We all make mistakes.

I make mistakes all the time. But I keep my mistakes small. Small mistakes are OK. Cut your losses and move on to the next.

If you take a big loss, that’s OK. Learn from your experience. But never hold and hope. Again, hope is not a strategy. Is it sinking in yet?

How My Students Trade Penny Stock Pumps

When UAVS crashed after its debacle of a press conference, my students were cleaning up.

Don’t think this had anything to do with luck either. My students have studied these plays, and they knew what to expect.

Tim Gritanni reports making $80K, and Jack Kellogg reports $16K in profits.**

supernova placement

My top students are used to these companies failing. They’ve studied the past and know the drill. Never trust anyone and always expect the worst.

(**Students’ results aren’t typical. These students put in the time and dedication and have exceptional skills and knowledge. Most traders lose money. Always remember trading is risky … never risk more than you can afford.)

Trading Challenge

In a world full of fakers and liars, I’m the real deal. But don’t take my word for it. Check my record. I share my wins AND my losses too.

If someone won’t show you every trade, including their losses, can you really trust them?

But if you’re ready to take your trading to the next level…

If you’re ready to forget everything the news media and talking heads want you to believe about Wall Street … and make a serious change in your life and willing to make sacrifices to live the life you want … Apply now for my Trading Challenge.

Lately, in these insane penny stock markets, people are clamoring to get in … But not everyone is accepted. Do you have what it takes? Find out now.

The Wrap on Pumped Penny Stocks

In today’s world, you’re better off erring on the side of caution.

The big lesson I want you to learn here is to be overly cynical. It’s a smart lesson to learn…

… because if you don’t learn this lesson from me now, you’re likely to learn it the hard way in the future.

Pumped penny stocks are scams. There’s no free lunch. Ever. If you want to succeed in trading, you gotta put in the time and effort to learn the markets.

You can play these pumps, if you’re prepared. Start by studying my 6,300+ videos with a Pennystocking Silver subscription. Level up from there.

Most traders fail. What are you willing to do differently?

What do you think of pumped penny stocks? I want to hear from you about this! Leave a comment below.

The post Pumped Penny Stocks: Expect the Worst and Avoid Disappointment appeared first on Timothy Sykes.



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Significant Activist Hedge Fund Activity (Last 7 Days)

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These are the latest Schedule 13D forms filed by activist investors in the last 7 days. Activist investors are investors that make an investment with the intention of influencing management in some way. There is evidence that following activist investors into investments can generate excess returns. Schedule 13G forms, in contrast, are filed by significant investors with no intention of influencing management (such as Index funds).

There is always a lot of interest in insider trades, but what a lot of people probably don't realize is that hedge fund activity is probably more predictive of future returns than insider activity. The reason is that hedge funds (a) have large research budgets, and (b) have a choice where to put their money. In contract, insiders have no choice where to put their money, but only when to time their transactions.

New Filings

This table lists new 13D filings in the last week. A new filing does not necessarily indicate a new position, as investors frequently accumulate in advance before reaching the filing threshold.

Date Form Company Investor Shares Ownership Change
05‑29 13D ATAO / Altair International Corp. EROP Capital LLC 50,636,022 9.9%
05‑28 13D NCLH / Norwegian Cruise Line Holdings Ltd LC9 Skipper, L.P. 33,119,840 11.4%
05‑28 13D BBW / Build-A-Bear Workshop, Inc. Avram Glazer Irrevocable Exempt Trust 1,120,736 7.38%
05‑28 13D NVNT / Novint Technologies, Inc. Congregation Ahavas Tzdokah Vchesed Inc. 61,722,996 30.5%
05‑27 13D GFY / Western Asset Variable Rate Strategic Fund Inc. Bulldog Investors, LLC 309,915 %
05‑27 13D NTP / Nam Tai Property Inc. ISZO CAPITAL LP 3,812,450 9.8% 48.48
05‑27 13D PKKW / Parkway Acquisition Corp STILWELL JOSEPH 306,358 5.1%
05‑27 13D ZMTP / Zoom Telephonics Inc. Palm Management (us) Llc 5.1%
05‑27 13D GEOS / Geospace Technologies Corp Nierenberg Investment Management Company, Inc. 699,240 5.1% 0.00
05‑27 13D FPAC / Far Point Acquisition Corporation Silver Lake (offshore) Aiv Gp Iii, Ltd. 9,487,500 15.0%
05‑26 13D BHR / Braemar Hotels & Resorts Inc. Auto Services Company, Inc. 2,014,461 5.9%
05‑26 13D AGTX / Agentix Corp. Stevens Scott B 2,188,070 57.4%
05‑22 13D CCO / Clear Channel Outdoor Holdings, Inc. ARES MANAGEMENT LLC 27,461,773 5.9%
05‑22 13D ASFI / Asta Funding, Inc. RBF Capital, LLC 583,198 8.8% 0.00
05‑22 13D 078771300 / BELLEROPHON THERAPEUTICS INC Puissance Life Science Opportunities Fund Vi 1,207,173 13.1%

Amended Filings

This table lists amended filings in the last week, and is useful for monitoring changes in existing investments or when a fund closes a position. I have eliminated all filings with less than a 5% change in ownership.

Date Form Company Investor Shares Ownership Change
05‑29 13D/A WYY / WidePoint Corp. Nokomis Capital, L.L.C. 8,378,081 9.9% -19.51
05‑29 13D/A TESS / Tessco Technologies, Inc. Lakeview Investment Group & Trading Co LLC 697,324 8.2% 18.84
05‑28 13D/A TMBR / Timber Pharmaceuticals, Inc. TardiMed Sciences LLC 5,666,152 47.7%
05‑28 13D/A AVID / Avid Technology, Inc. Impactive Capital Lp 5,089,117 11.6%
05‑28 13D/A OXLCO / Oxford Lane Capital Corp. Karpus Management, Inc. 1,635,743 18.57% -9.81
05‑28 13D/A SENS / Senseonics Holdings, Inc. NEW ENTERPRISE ASSOCIATES 10 L P 26,009,686 11.9% -8.46
05‑27 13D/A BIF / Boulder Growth & Income Fund, Inc. ERNEST HOREJSI TRUST NO 1B 45,344,694 44.9% 179.58
05‑27 13D/A ETM / Entercom Communications Corp. FIELD JOSEPH M 17,694,496 12.8% 11.30
05‑27 13D/A OVID / Ovid Therapeutics Inc. Tls Advisors Llc 2,489,415 4.55% -26.61
05‑27 13D/A 00653Q102 / AdaptHealth Corp. BlueMountain Capital Management, LLC 3,647,353 8.0%
05‑27 13D/A ZMTP / Zoom Telephonics Inc. Hitchcock Jeremy P. 4,602,321 21.5% 20.79
05‑27 13D/A VXRT / Vaxart, Inc ARMISTICE CAPITAL, LLC 8,400,000 11.3% -19.29
05‑27 13D/A ALSK / Alaska Communications Systems Group, Inc. AEGIS FINANCIAL CORP 2,433,941 4.54% -21.86
05‑27 13D/A AGYS / Agilysys, Inc. MAK CAPITAL ONE LLC 4,133,991 16.3% 59.80
05‑26 13D/A TPTX / Turning Point Therapeutics, Inc. GLAXOSMITHKLINE PLC 2,268,660 5.5% -17.91
05‑26 13D/A HLI / Houlihan Lokey, Inc. HL VOTING TRUST 18,524,533 27.09% -7.73
05‑26 13D/A CLCN / Creative Learning Corp. Furlow Blake 2,301,239 17.5%
05‑26 13D/A LVGO / Livongo Health, Inc. Gc Venture Lh, Llc 20,499,185 20.96% -16.16
05‑26 13D/A EVFM / Evofem Biosciences, Inc. Pdl Biopharma, Inc. 3,333,334 6.3% -81.14
05‑26 13D/A SCPH / scPharmaceuticals Inc. ORBIMED ADVISORS LLC 4,797,148 17.9% 9.82
05‑26 13D/A SOY / SunOpta Inc Engaged Capital LLC 15,731,907 16.5% 5.77
05‑26 13D/A CWBC / Community West Bancshares PEEPLES WILLIAM R 811,298 9.6%
05‑26 13D/A PALT / Paltalk, Inc. Lerner Clifford 682,139 9.9%
05‑26 13D/A AGTX / Agentix Corp. Winterhalter Michael 150,000 5.8%
05‑26 13D/A NVNT / Novint Technologies, Inc. Christoff Ryan 11,142,857 5.5%
05‑26 13D/A KRTX / Karuna Therapeutics, Inc. Puretech Health Llc 4,739,897 18.1% -11.27
05‑23 13D/A FND / Floor & Decor Holdings, Inc. Ares Corporate Opportunities Fund Iii Lp 8,724,262 8.5% -34.11
05‑23 13D/A FND / Floor & Decor Holdings, Inc. Fs Equity Partners Vi, L.p. 8,724,262 8.5% -34.11
05‑22 13D/A GPX / GP Strategies Corp. Cove Street Capital, LLC 2,681,735 15.62% 10.08
05‑22 13D/A ALLK / Allakos Inc. Rivervest Venture Fund Iii, L.p. 5,791,572 11.9% -33.15
05‑22 13D/A H / Hyatt Hotels Corp. 1922 Trust Co LTA 4,130,521 4.1%
05‑22 13D/A ARCT / Arcturus Therapeutics Ltd. Ultragenyx Pharmaceutical Inc. 3,000,000 14.6%
05‑22 13D/A ELST / Electronic Systems Technology, Inc. EDCO PARTNERS LLLP 1,678,500 33.9% 25.56
05‑22 13D/A TPTX / Turning Point Therapeutics, Inc. ORBIMED ADVISORS LLC 2,027,550 4.9% -24.62
05‑22 13D/A ASND / Ascendis Pharma AS ORBIMED ADVISORS LLC 2,083,713 4.3% -17.31
05‑22 13D/A ALRM / Alarm.com Holdings, Inc. TCV VII LP 547,170 1.1% -91.27
05‑22 13D/A CBB / Cincinnati Bell, Inc. GAMCO INVESTORS, INC. ET AL 1,230,614 2.43% -12.27
05‑22 13D/A SPCE / Virgin Galactic Holdings, Inc. Vieco 10 Ltd 89,790,438 42.7% -19.89
05‑22 13D/A FTV / Fortive Corporation RALES STEVEN M 16,620,210 4.9% -20.97
05‑22 13D/A CREX / Creative Realities, Inc. Horton Capital Partners, LLC 497,006 4.99% -43.30
05‑22 13D/A APAM / Artisan Partners Asset Management Inc. Colson Eric R 11,790,533 17.7% -6.35
05‑22 13D/A MOD / Modine Manufacturing Co. GAMCO INVESTORS, INC. ET AL 1,406,480 2.77% -17.56
05‑22 13D/A EGLT / Egalet Corporation Capital Royalty L.p. 0 0.0% -100.00
05‑22 13D/A LYL / Dragon Victory International Limited Cyn Cherish Capital Ltd 442,524 3.875% -76.39
05‑22 13D/A FXNC / First National Corp. WILKINS III JAMES R 395,449 8.2%
05‑22 13D/A AHPH / ALLIED HEALTHCARE PRODUCTS INC Weil John D 659,355 16.4% -48.26
05‑22 13D/A ANCN / Anchiano Therapeutics Ltd. Palisade Medical Equity I, Lp 1,848,200 4.98% -64.43
05‑22 13D/A GMDA / Gamida Cell Ltd. Ai Gamida Holdings Llc 9,903,600 20.93% -22.40
05‑22 13D/A WYY / WidePoint Corp. Nokomis Capital, L.L.C. 10,329,522 12.3% -20.13
05‑22 13D/A CRK / Comstock Resources, Inc. Covey Park Holdings Llc 167,404,429 72.2% -20.31
05‑22 13D/A 078771300 / BELLEROPHON THERAPEUTICS INC Puissance Cross-border Opportunities Iii Llc 53,327 0.9%
05‑22 13D/A GPAC / Global Partner Acquisition Corp. Coliseum Capital Management, LLC 16,956,602 41.0% -37.02
05‑22 13D/A 03836J102 / Aprea Therapeutics Inc 5am Ventures Iv, L.p. 2,597,653 12.3%

Source: Fintel.io/activists

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This Top TSX Gold Stock Is a Great Long-Term Investment

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There is no question this economic environment is ideal for gold prices and, therefore, TSX gold stocks. However, some gold stocks are so strong, investors can buy the stocks knowing they are great long-term investments.

Gold is something investors should always have at least a small portion of their portfolio exposed to. And in times of uncertainty, when a safe-haven asset is demanded, that’s when investors should be increasing their exposure to gold.

Today’s environment is precisely that. The uncertainty in both financial markets and economies makes a safe-haven asset like gold one of the most attractive assets to be increasing exposure to.

TSX gold stocks today

The economic environment around the world has been dire since the coronavirus pandemic hit. With no vaccine and little knowledge of the deadly disease, governments had to act quickly to protect their countries, enacting measures that have decimated economies.

Then, to deal with the economic consequences, massive fiscal and monetary stimulus has taken place around the world.

While this stimulus was needed and warranted, it doesn’t take away from the fact that central banks are printing money and governments are issuing new debt at unprecedented levels.

All of these conditions are creating the perfect storm for gold prices to rise. Some analysts even think that gold could skyrocket to $3,000.

Gold prices have been gaining momentum going back to December of 2018. In those 17 months since, prices have increased roughly 40%, an extremely rapid pace for gold.

And when you consider that the environment today is even more favourable than it was in 2018 and 2019, increasing exposure to gold investments is a no-brainer.

Top TSX gold stock to buy

Any time the price of gold is rising significantly, gold stocks will see a major positive effect. Since December 2018, the iShares S&P/TSX Global Gold Index ETF is up roughly 100% and more than double the pace of gold.

One stock that makes up 20% of the fund is the massive gold producer Barrick Gold (TSX:ABX)(NYSE:GOLD).

Barrick, a $60 billion company, is one of the world’s largest gold producers and an investor favourite in the gold industry.

The company is one of the best in the business, and, with its massive global diversification, it’s a stock you can hold for the long term.

In the first quarter, Barrick produced incredible results. The average realized gold price was $1,589 — a 22% increase from the same quarter in 2019.

That increase in gold price drove a 30% increase in revenue and a roughly 50% increase in operating and net income.

And when you consider that the average realized price in the quarter is nearly 10% below where gold is today, it’s clear this company is going to have a strong period of performance over the near term.

One of the reasons Barrick is so attractive today is the focus management has had on cutting costs and increasing shareholder value.

In the first quarter, the company produced nearly 1.25 million ounces and had all in sales costs of just $950 an ounce.

So, it’s no wonder why Barrick, the top TSX gold stock, is so profitable in the current environment and will continue to increase its profitability as gold prices rise.

Bottom line

Barrick’s solid operations and high-quality management team makes it one of the top gold stocks on the TSX.

It even pays a dividend that yields more than 1%. While this isn’t going to make or break your investment, it demonstrates management’s willingness to return capital to shareholders.

If you are underweight gold or need some resiliency in your portfolio, I would seriously consider adding a position in Barrick Gold today.

As we approach a new month, check out some of the other top stocks to buy besides Barrick.

The 10 Best Stocks to Buy This Month

Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.
Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Simply click here to discover how you can take advantage of this.

Click Here to Learn More Today!

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Fool contributor Daniel Da Costa has no position in any of the stocks mentioned.

The post This Top TSX Gold Stock Is a Great Long-Term Investment appeared first on The Motley Fool Canada.



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