APRIL 4, 2020
one skips this monstrous spanking machine market.How ’bout gold? No, not even things that shine escape the spank. Zoom Video’s been shining. Following the Guardian beat-down article it more glows, in the dark, as a misleader, rather than a leader. Love it or not, it’s difficult to love a firm that announces its’ “halting feature development to focus on security and safety.” Isn’t that supposed to be job one?
But then Kirkland’s the question. When we last covered KL they were technically challenging a jaw-dropping three-year uptrend. And Now? “Kirkland Lake Gold. Mining For Facts.”
yet another ultra-strong quarterly, and 2019 performance on February 20th, Kirkland Lake suffered. Why? Shareholder fears centered around concerns about Fosterville’s long-term production sustainability. Fosterville, located in Victoria Australia, is KL’s cash cow. Is Kirkland Lake Gold a good gold stock? Yes, maybe the best. Concerns seem overdone, as the mine’s production level is expected to last for at least another three years.
Some stocks do get cheaper as their price drops. What does that mean? It means the quality remains while the price is dropping. Kirkland Lake proves this fact. In Q4 KL posted y/y revenue growth of 47%, and EPS growth of 76%. For full year 2019 KL posted EPS growth of 104%, and revenue growth of 51%. Cash from operations increased by 68%. They expanded free cash by 81%. Simultaneously they reduced their AISC, or “all-in sustaining cost,” the primary industry metric, by 18%; $564oz. They also doubled their cash and their dividend, expanded Cap-Ex spending, and continued their share repurchase plane. On top of that KL has 0 debt.
Covid-19 has brutalized both people and markets. No sector or individual stock has been spared, gold included. Gold performs well when currencies and financial systmes are weak or threatened. Yet gold has thus far proved spotty amid this pandemic and subsequent economic turmoil.
Long term production is precisely why the company acquired Detour Gold in late 2019. The deal has already closed. That deal itself created concern. Again, why? Production cost. KL has been one of, if not the lowest, cost producer. That is set to change, yet not as dramatically as feared.
Kirkland Lake Gold KL: NYSE 04-04-20
ranks 1st out of all major gold producers over that past 20 days returning 0.30%, and 2nd over the past 5 days returning 8.09%. Yet KL has under-performed by nearly 52.32% Newmont Corporation NEM: NYSE over the past six months, and Barrick GOLD: NYSE by 43.4%.
However the picture is not that simple. Over the past one and three year periods Newmont has returned 36%, and 48%. Barrick has returned 51% and 6.7%. Over the same one and three year periods KL has returned 6% and 346%.
Kirkland’s advancing on every fundamental front simultaneously. Their growth is both extremely strong and panoramic. We’re hard pressed to name any company who has doubled their cash position, and dividend, and expanded capital expenditures while putting up extraordinary EPS and revenue rates. The exceptionally strong leadership and fundamentals of Kirkland Lake Gold will we believe in the long run rewarded. As always good luck and good investing. Stay safe and keep the faith.
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