April 10, 2006
SpeculatingStocks.com Stock Pick: Northgate Minerals Corporation (NXG)
Stock Price: $2.77 (long-term strong buy)
Northgate Minerals Corporation is a gold and copper mining company focused on operations and opportunities in North and South America. The company's main asset is its 100% interest in the Kemess South open pit mine in north-central British Columbia, Canada.
NXG is a substantially undervalued gold and copper mining company. Northgate Minerals reported record quarterly earnings and cash flow on February 23rd. For the fourth quarter, the company recorded net earnings of $37.85 million on revenue of $95.65 million. Operating cash flow for the quarter was $41.8 million. Full year revenue came in at $257 million. Right now, NXG is sitting at a market cap of only $594 million.
NXG is trading at a forward P/E of only 3.92 based on fourth quarter profit numbers. With the price of gold trading up and up, its likely that they will grow profits much more drastically over the next four quarters. The best part about Northgate Mineral's operation is that they are producing gold at a record low cash cost of only $59 per ounce. Gold is trading at $600 per ounce. They cash the difference and so do investors.
NXG traded the most shares in its history today, 6.58 million. This stock is in the early stages of becoming discovered. The stock has reached an all-time high price each of the last two days. NXG is the real deal. It's hard to find a gold mining stock like NXG that has stayed under the radar. NXG is becoming a steady gainer on a daily basis making it a good play for the short and long-term.
First quarter results are due out on May 1st. We expect earnings to be strong based on financial improvement by the company over the last several quarters and rising gold prices.
SpeculatingStocks.com Target Price: We expect NXG to reach $10.00 by the end of the year with possible strong upside surprises.