New gold stocks added to my watchlist

Posted on May 12, 2007 , filed under Stocks | Print This Post

I have three new gold stocks that I have added to my watchlist, Eldorado Gold Corporation (AMEX: EGO), IAMGOLD Corporation (NYSE: IAG) and Meridian Gold, Inc. (NYSE: MDG).

EGO appears to be a decent growth play with exposure to Turkish and Chinese gold mines. Quarterly revenue growth year over year is 383.60%. EGO has cash of 61.18M and debt of 66.36M. A high debt to equity ratio is something I don’t like to see.

IAG has a low debt to equity ratio. In the case of Meridian Gold they have no debt. A strong cash position and low debt normally means a company is in no interim danger of going out of business. Should the spot price of gold head southward IAG and MDG should be able to whether a downturn. Capital preservation should be an important focus of any investor. I build the majority of my watchlist’s with a medium-term 1-3 year focus in mind.

All three companies have positive ROA and ROE statistics. All three companies are trading below their 52-week highs. I am looking at the 52-week change in price to gauge the potential percentage gains an investor may see if the spot price of gold reaches a new high. At the time of writing this article:

EGO is off 10.84%
IAG is off 36.6%
MDG is off 29.6%

A cursory look at all three companies show them to be decent investments if you are bullish on the price of gold in the medium to long-term. As always it appears the market places an emphasis on growth versus value. EGO is off the lowest percentage from its previous 52-week high. The prices of all three stocks look attractive to me given gold’s current spot price of approximately $670 per ounce.

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