Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Shares of Newmont Corporation Rose 1.5% in March

By Scott Levine - Apr 2, 2020 at 2:32PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Amid the dark days brought by the market's downturn, this gold miner's luster stood out.

What happened

As the S&P 500 plunged nearly 13% in March, shares of Newmont Mining (NEM -1.31%) 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.

Gold nuggets on a metal plate.

Image source: Getty Images.

So what

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.

Now what

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.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Newmont Mining Corporation Stock Quote
Newmont Mining Corporation
NEM
$45.94 (-1.31%) $0.61
S&P 500 Index - Price Return (USD) Stock Quote
S&P 500 Index - Price Return (USD)
^GSPC
$4,297.14 (0.40%) $16.99

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
400%
 
S&P 500 Returns
128%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 08/15/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.