Geopolitical tensions are on the rise, and despite the uptick in the S&P/TSX Composite Index, the Canadian benchmark index, some Canadians might be wondering whether it’s the right time to invest in the stock market. What if I told you there’s a stock that might be perfect for investing in the current market environment?
This gold stock has been delivering outsized returns for a while now, and it has the kind of fundamentals to support and sustain its growth. Not many investors know about the underrated gold stock, but I’m sure that plenty will get to hear its name in the coming weeks. Lundin Gold (TSX:LUG) is a stock many of us have been sleeping on, and it’s about time you get to know about it.
Lundin stock
Lundin Gold is a Vancouver-based $17.72 billion market capitalization company that runs some of the highest-grade gold mines worldwide. The Fruta del Norte mine, located in Ecuador, is known for producing high volumes of the rare earth metal at remarkably efficient costs for the company.
Even for the novice investor, it’s no secret that gold demand soars during economic uncertainty, currency swings, inflation, or when geopolitical tensions rise. Considering this, a gold mining company is naturally going to see its financials improve, resulting in a strong bull run on the stock market.
Lundin doesn’t just rely on factors out of its control to deliver a good performance in the market. The company also runs a tight ship. The most recent quarterly results saw LUG stock report a US$3,081 per ounce average gold price in the first quarter of fiscal 2025, much better than many of its closest peers.
The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) were one of the best the company has had, coming in at US$242 million. The quarter also saw the company report net revenue of US$356 million, after deducting costs for refining the gold.
At a time when input costs are getting higher in the gold industry, LUG stock has decreased them to keep its margins high. With gold prices rising, the margins get even better for the company.
Foolish takeaway
As of this writing, LUG stock trades for $73.46. The stock is up by an astounding 276.72% in the last 12 months. To give you better context, the rest of the stock market is up by just under 23% in the same period. The company clearly has solid fundamentals, more room to grow, and it pays its investors quarterly dividends.
High profit margins mean that LUG stock is not being weighed by liquidity troubles. This gives management more opportunities to reward shareholders and fund more growth for the company comfortably. The company is on the hunt for more areas.
Despite its smaller size compared to many other gold stocks, Lundin Gold looks as close to a solid gold investment that you can find in the stock market in the shape of a publicly traded company.
All that said, Lundin Gold is still prone to fluctuations in commodity prices. It is a stock that currently has the financials to continue beating the rest of the market, but I would be careful not to put all my eggs in one gold basket if I were investing in the stock.
