Insights

Gold is at multi-year lows. What does this mean for Northern Star shares?

Northern Star shares have moved to reverse off 12-month lows.
The post Gold is at multi-year lows. What does this mean for Northern Star shares? appeared first on The Motley Fool Australia. –

The price of gold has been sliding into the red since peaking at US$2,052 per troy ounce on 8 March 2022 to now trade at US$1,716/t.oz.

Pressure from a strong USD and rising interest rates has seen demand for bullion drop to new lows, reports say.

“[G]old prices remained about 16% off the year to date high as higher interest rates and a relatively strong dollar continued to pressure bullion demand,” Trading Economics wrote.

The opportunity cost of holding gold increases with rising yields as the yellow metal pays no interest/yield.

Meanwhile, shares of key ASX gold player Northern Star Resources Ltd (ASX: NST) have settled higher this week after drifting to 52-week lows of $6.76 on 19 July.

The gold price and Northern Star share a tight relationship in directional movement, as seen on the chart below, displaying both instruments since November 2020.

What’s in store for Northern Star shares?

The gold mining giant recently posted its Q4 FY22 earnings and results came in line with expectations.

It sold a total of 1,561 thousand ounces (koz) of gold at an all-in sustaining cost (ASIC) of $1,633/oz, within guided ranges.

Northern Star also provided FY23 guidance in its report. It forecasts gold sales of 1,560-1,680koz gold to be sold on an ASIC of A$1,630-1,690/oz.

Meanwhile, the downward slide in gold doesn’t appear to have impacted the outlook from brokers.

Exactly 100% of analysts covering the company rate it either a buy or strong buy right now, according to Refinitiv Eikon data.

The consensus price target from this extensive list is $10.94, suggesting there is more upside to come if the analysts are correct.

Northern Star has a debt to asset ratio of 5.5% and is expected to increase its capital expenditures in FY23.

It also generated an above-average return on invested capital (ROIC) last half of 19.7% and printed $152 million in company-reported free cash flow. Investors realise a 1.8% yield on this.

Aside from that, Northern Star shares trade at 6.4 times trailing price-to-earnings ratio (P/E) and a 15.7% earnings yield, whilst leaving shareholders a 2.7% trailing dividend yield.

Even still, the market has punished Northern Star these past 12 months. It is now down 25% in that time, or 22% this year to date.

The post Gold is at multi-year lows. What does this mean for Northern Star shares? appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of July 7 2022

setButtonColorDefaults(“#0095C8”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#0095C8”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

5 things to watch on the ASX 200 on Wednesday
Here are the top 10 ASX 200 shares today
What’s the dividend yield on Northern Star shares in July?
5 things to watch on the ASX 200 on Monday
Northern Star share price edges higher following ‘strong’ quarterly performance

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Rebate Rewards

Level 2 Rebate

Deposit $2,000 and get $200 Rebate
$ 200 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $2,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $200 Rebate
Popular

Level 1 Rebate

Deposit $1,000 and get $100 Rebate
$ 100 Rebate
  • 3 Simple Steps
  • 1. Register Using The Link Below (Promo-Code: WEBREBATE)
  • 2. Deposit $1,000 and place one trade at any non-Austalian market within 30 calendar days
  • 3. Receive Your $100 Rebate

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex Securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here To Get Started
EASY QUALIFICATION & LOW ENTRY
NEW CLIENT REBATE OFFER
EARN UP TO $200 CASH REBATE
Act Fast - Promotion Ends In
Click Here For More Info