Here's Why Newmont Stock Popped Today (Hint: Wall Street Likes its Valuation)
Long-term gold bulls need to be patient as there's probably still a lot of speculative money in the trade.
Overview
Shares in gold miner Newmont Corp (NYSE: NEM) rose by as much as 5.4% in early morning trading today. Yes, the price of gold is up slightly as I write, but that's not the real reason investors feel more optimistic today. The likely catalyst for the stock's move today is a TD Cowen analyst's upgrade of the stock from a hold recommendation to a buy, even as the analyst, Steven Green, nudged the price target down to $127 from $129.
The stock has been weak recently and is down by a low single-digit percentage on the year. That's enticing enough to encourage the analyst to recommend the stock on valuation grounds. Evaluating commodity stocks like Newmont is always a difficult endeavor, as it always implies some sort of assumption for the underlying commodity it produces; in this case, gold.
Details
However, I do think there's a strong case for agreeing with the analyst. The weakness in gold prices this year is not surprising, given the rush by investors to invest in the precious metal last year. Simply put, the massive influx of speculative money into gold left it susceptible to a correction, as easy money can flow in and out.
Source
Originally published at www.fool.com.