As the S&P 500 plunged nearly 13% in March, shares of Newmont Mining (NEM 6.26%) managed to rise 1.5% last month, according to data from S&P Global Market Intelligence. Juxtaposed with the market sell-off, the modest rise in Newmont's stock is a welcome sight for investors, but it's even more noteworthy considering the average price of gold per ounce fell from $1,597 in February to $1,592 in March.
What was it about the company that glittered so brightly in investors' eyes? For one, Newmont strengthened its balance sheet in the first week of the month by selling an equity stake in Continental Gold; moreover, the company provided shareholders with insight into how it was dealing with the novel coronavirus outbreak. Finally, a vote of confidence from Wall Street regarding the company's stock helped buoy shareholder's enthusiasm.
While the economy faces a flurry of challenges brought on by the COVID-19 outbreak, investors are recognizing the value strong balance sheets provide to companies. So when Newmont announced it had sold its equity stake and bond in Continental Gold for $260 million in cash, shareholders took note.
Later in the month, management addressed the effect of the pandemic on the company's operations, stating that it was withdrawing its original 2020 gold production guidance -- 6.4 million ounces -- as it placed four of its assets on care and maintenance. Although this was disappointing news for investors, shareholders recognized that it doesn't portend a dismal 2020 for the company. Instead, they took heart at the bright spots in management's press release. For one, Newmont reported that it wasn't currently "experiencing significant delays in the shipping of concentrate or transportation and refining of dore." Furthermore, management expressed optimism at its resilience, stating that the company "is well positioned to safely and responsibly generate long-term value for all of our stakeholders."
Lastly, bulls took note when Deutsche Bank revealed its positive outlook on Newmont's stock. According to thefly.com, Chris Terry, an analyst with Deutsche Bank, raised the investment bank's price target on shares, which are rated a buy, to $54 from $50.
A global leader in gold mining, Newmont Corporation is well positioned to weather the headwinds brought by the novel coronavirus outbreak. With $2.2 billion in cash on its balance sheet as of the end of 2019, Newmont's strong financial position makes it one of the more attractive opportunities for investors seeking exposure to the yellow metal. The market seems to agree. As of this writing, Newmont's stock continued its climb, rising 4.6% in contrast to the 5.3% dip in the S&P 500.