Why Did Equinox Gold Stock Soar 9% Yesterday?

Gold stocks are rallying. The market may be undervaluing gold mines in gold stocks in today’s high inflationary environment.

Kay Ng

Author Bio

Kay graduated from the University of British Columbia with a Bachelor of Science in Computer Science and furthered her studies in financial markets, finance, and financial accounting. She began investing in dividend stocks in 2008, turning an early interest into a lasting passion. Over the years, Kay has refined her investment approach to focus on high-quality businesses, using fundamental analysis and valuation to identify long-term investment opportunities. Her investment research and articles have been featured in The Motley Fool, Sure Dividend, and Seeking Alpha. Outside of investing, Kay enjoys playing the piano, from popular songs learned by ear to challenging classical compositions. Her favourites include Fantaisie-Impromptu by Frédéric Chopin and La Campanella by Franz Liszt.

Education

Bachelor of Science (BSc) in Computer Science, University of British Columbia Further studies in financial markets, finance, and financial accounting

Areas of Expertise

Dividend stocks, fundamental analysis, company valuation, quality investing, long-term investing, business fundamentals, and identifying investment opportunities in high-quality companies.

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Favorite Investment Quotes

“The best way to measure your investing success is not by whether you’re beating the market but by whether you’ve put in place a financial plan and a behavioral discipline that are likely to get you where you want to go.” — Benjamin Graham “A market downturn doesn’t bother us. It is an opportunity to increase our ownership of great companies with great management at good prices.” — Warren Buffett

Published January 20, 2022 12:00 pm EST

Equinox Gold (TSX: EQX)(NYSE:EQX) was founded in 2007, and its headquarters are in Vancouver, British Columbia. The gold producer achieved its guidance with 602,100 ounces of gold produced in 2021.

What happened?

Equinox Gold stock soared 9% yesterday. A similar rally is seen across many other precious metal stocks, including SilverCrest Metals and New Gold.

Here are some of Jaime Carrasco’s expert opinions from yesterday on the gold and silver stock rally. He’s a portfolio manager at Canaccord Genuity.

“In preparation for rising inflation resulting from central bank policy, I continue to advise that clients hold some asset allocation in precious metals… Currently, the producers and royalty companies offer a great entry point because while gold is at US$1,800, their valuations are trading as though gold is much lower, which means that investors that are willing to buy right and sit are acquiring historically low price to cash flow assets that will quickly accelerate as the price of gold begins to price in true inflation.”
Jaime Carrasco

So what?

The gold producer is led by Ross Beaty as the chairman; he is an experienced geologist and resource company entrepreneur. Equinox Gold is one of the only gold producers of scale operating entirely in the Americas, which are relatively stable geographies to operate. The consensus across 12 analysts implies a 12-month upside potential of 54% from $9.25 per share at writing.

Now what?

Gold prices are anticipated to increase from higher inflation. Equinox Gold has seven producing mines and five growth projects. So, the mid-cap gold producer can benefit from production growth and higher commodity prices. Currently, it aims to produce one million ounces of gold annually.

In Q4, it started constructing the Greenstone project in Ontario and made significant progress in constructing Santa Luz in Brazil, which together will add 340,000 ounces of production when completed. It wouldn’t be farfetched for Equinox Gold stock to surpass its 2020 high of $17 for a multi-year price target as it grows its production.