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Gold Fields: A Buying Opportunity With $6/Share Upside Potential

Summary

• Gold Fields is only trading at a market cap of USD2.89 billion at the moment.
• The price of the stock has weakened during the recent months and currently stands at around USD3.5.
• The company has a strong portfolio of mining assets and a very good financial performance.
• 2018 is probably going to be better than the previous fiscal year because of the growing demand and favorable market conditions in the gold market.
• For the investors that are not averse to risky investments, putting a reasonable amount of money into GFI could potentially turn out to be an excellent investment.

Investment Thesis

Gold Fields Limited (NYSE: GFI) has a strong portfolio of mining assets and a very good financial performance. However, it is only trading at a market cap of USD2.89 billion. The company has attributable gold mineral reserves of around 49 million ounces and gold mineral resources of around 104 million ounces.

Attributable copper mineral reserves total 764 million pounds, while mineral resources are worth 4,881 million pounds. The price of the stock has weakened during the recent months and the current price makes this company a great opportunity for investors to trade in its shares as a long-term investment.

Company Overview

GFI is a globally diversified gold producer with seven operating mines in Australia, Ghana, Peru and South Africa. Its total attributable annual gold-equivalent production is approximately 2.2 million ounces.

Earnings Quality

The company's revenue increased in 2017 to USD2.81 billion from USD2.75 billion in 2016. The main driver for revenue growth was the increase in the price of gold. The price of gold continued its volatile recovery during 2017, ending the year at USD1,300/oz, up USD150/oz from the end of December 2016 and USD230/oz from the December 2015 low of USD1,070/oz.