Wednesday, December 11, 2013

Goldcorp Gains as Gold Rises, Barclays Names It Top Pick

There’s a lady who’s sure all that glitters is gold, but that lady is not Barclays, which named Goldcorp (GG) a top pick today.

Eva-Lotta Jansson/Bloomberg/Getty Images

Goldcorp has gained 3.4% today, about in line with the Market Vectors Gold Miners ETF (GDX) 3.5% rise. And much of the credit, of course, goes to the jump in gold prices: the SPDR Gold Trust (GLD) has gained 1.5%.

But Barclays has high hopes for Goldcorp, which it made one of its top picks for 2014 today. Analyst Farooq Hamed writes:

Goldcorp is the most compelling growth story in our coverage universe as the company's development projects are well into the construction phase, with all of its current growth projects expected to commence first gold production within the next 18 months. We estimate gold production growth of 33% by the end of 2015. With 2013 being the company's largest capex year, we expect spending to fall in 2014 by $0.5bn or 21%. Also, in 2013 GG executed a cost-cutting program, generating roughly $280mn in cost savings, some of which should translate favourably into lower operating costs. Looking at all-in sustaining costs across our coverage universe, we are forecasting $888/oz for Goldcorp in 2014, which falls in the lower half of our group, and sits well below the group average of $959/oz.

Among the other material stocks joining Goldcorp among Barclays’ top picks for 2014: Freeport-McMoRan Copper & Gold (FCX) and CF Industries (CF). Freeport-McMoRan has gained 0.9% to $34.95 and CF Industries has dropped 0.6% to $230.10.

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