Given gold's historic ascent in recent years, Fools might presume that gold mining stocks have enjoyed blockbuster shareholder returns. But even the most profitable miners have yielded downright disappointing share performance. However, for at least one company, that dismal trend could soon take a turn for the better.
Over the past year, only a select few miners -- including notably resurgent mid-tier producers Gammon Gold
But even after years of relative weakness, I still believe that carefully selected miners will substantially outperform their underlying metal prices as this secular bull market unfolds. That's particularly true for miners whose full potential the market never seems to have fully reflected.
Incredibly, this stock has advanced only about 60% since I selected the miner as my top gold pick for 2009, even though gold has added 84%, from $850 to $1,563.50 as of this writing. In the interim, Agnico's gold production per 1,000 shares promptly tripled from 2008 to 2010, and that production is slated to expand by another 50% over the next five years.
Agnico reported adjusted net earnings this week of $76.5 million, representing a 221% year-over-year increase in earnings per share. First-quarter gold production grew 34% to 252,362 ounces of gold, although costs came in substantially higher at $531 per ounce, as a result of the Meadowbank fire. Megaminer Barrick Gold
Meanwhile, Agnico has reported exciting success year to date with its aggressive $145 million, 40-rig exploration program. This organic growth potential is precisely the sort of factor that I believe the market has failed to grasp in assigning value to the shares.
Enjoy the resulting market disconnect while it lasts. Agnico-Eagle Mines' potential won't remain underrealized for long. The impact of the Meadowbank fire is strictly temporary, while the gains looming for this well-run gold miner are bound to exhibit far greater permanence.
Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Agnico-Eagle Mines, Eldorado Gold, Gammon Gold, New Gold, and Yamana Gold. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a gilded disclosure policy.