Canadian gold miner Barrick Gold (TSX: ABX) is actually, on some metrics, the largest gold miner in the world. Thus, for investors who are looking at the sort of defensive growth such companies can provide in this rising gold price environment, Barrick is a company that deserves a place on one’s watch list.
That’s my view at least. Indeed, taking a look at Barrick’s stock price performance in the chart above, it’s very clear that the rising price of gold has been disproportionately beneficial to investors in this name, at least over the course of the past year or so.
Let’s dive into what the forward three-year outlook for Barrick looks like.
Source: Getty Images
Solid fundamentals driving share price growth
In order for Barrick to continue to see the kind of share price appreciation it has in the chart above, the company’s underlying fundamentals will need to remain rock solid. On this front, I think there’s a lot for investors to like, particularly when we look back at the gold miner’s recent quarters.
This past quarter, Barrick posted a whopping EPS increase of 59%, with the company’s underlying earnings per share increasing to $0.27. Importantly, adjusted earnings per share surged 84% to $0.35, and operating cash flow also increased by nearly 60%. These factors drove cash flow of $375 million, a key factor enabling Barrick to continue to reduce its debt.
With another 5% reduction in Barrick’s net debt, I think this is a company with a much better balance sheet (and more positive outlook moving forward) investors may want to take a harder look at right now.
Solid growth catalysts make Barrick a buy
In my view, Barrick’s most likely direction of travel over the course of the next three years is higher. I do think the price of gold is likely to remain elevated here, with a mixture of recessionary and inflationary headwinds continuing to hamper the market.
Assuming Barrick is able to continue to increase its production over time (while improving its operating efficiency), increasing margins should lead to a surge of investor interest in this conventional option for investors seeking precious metals exposure.
