Wednesday, December 30, 2009

New Gold - An Interesting Gold Stock

New Gold (NGD) is a Canadian miner of gold, copper, and silver and has properties in Brazil, Mexico, Australia, Canada, and Chile. They are a small cap junior, but unlike the vast majority of future oriented juniors with explosive growth potential, they not only are producing good revenue now, they could be considered a value stock considering their rapid per share growth in everything but eps. The eps is sadly and chronically negative, but you have to suspect the new flood of revenue and cash flow may fix that:

The stock has climbed along with the gold bull since 2002 until 2006, where it was sent back to pre bull levels in the face of a very robust explosion in cash flow and revenue. For this fast growth rate, you must pay a price/sales of 3.1 and a price/cash flow of 18 - very reasonable for any kind of stock, very rare for a small cap gold stock. Why is it such a dog? Well, they are fighting with the Mexican government about environmental problems with their Mexican mine, and only two analysts cover the stock. I'm sure they have other things holding them back. The stock is severely lagging the gold miners and its own financial results. If the clouds clear, this could be a rocket.

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