If you are looking for exposure to the gold sector Newcrest at the right price is the preferred gold exposure.
But it is more than just a short-term play on the gold price. The company has built itself into a long-term growth business.
The yield on the stock is only 1.5%, as such it is not an income play. To invest in NCM is to chase the long-term growth on a well run business coupled with the stability and growth in the gold price.
Nearly half of the assets in NCM are held in Australia reducing the sovereign risk of the company.
In 2010 NCM merger with Lihir to increase its exposure to PNG and West Africa. This will provide better exploration opportunities for the business.
With production for both gold and copper down over the last quarter we have seen the price come off. Although the numbers were disappointing there were some factors for the company not hitting target.
We expect that full year production will be back on track and meet forecast projections.
Recently, we have seen the price pull back into buying territory around $33.50.
We have a price target of $42 which provides a 25% return for the traders.
However, given the stability of the company and the long-term expectation that the gold price will remain high, I see this as a long-term holding in those portfolios which are not heavily geared towards income.
For more information on Newcrest Mining (NCM) please contact us on 07 4771 4577.