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Why UBS named Northern Star Resources Ltd (ASX:NST) a buy

Shares in $4.35 billion market cap gold production and exploration company Northern Star Resources Ltd (ASX: NST) have risen 53% in the last year from $4.59 at this time last year to $7.05 at the time of writing.

With a mild pullback in the works is it time to buy into the stock?

Late last month Northern Star announced it hit its production target of 600,000 ounces per annum, with June quarter production at 150,000 ounces.

Company Chairman Bill Beament said the company is “poised to maintain” the growth trend off the back of its highly successful exploration strategy and increased processing capacity.

Northern Star recently acquired the 1.2Mtpa South Kalgoorlie mill, which will support growth in its Kalgoorlie operations where the company has recently declared commercial production at its Millennium mine project.

UBS named Northern Star as a buy late last month – upgrading it from a sell, with a price target of $7.50.

Investors will be keen to feast their eyes on production and cost guidance for FY19 in August which should coincide with a wider strategic update about Northern Star’s future.

Share price pullbacks similar to those in late June could signal a buying opportunity for gold-seeking investors, if they time their entry well.

Gold shares have long been seen as “safe haven’’ stocks, and investors with interest in Evolution Mining Ltd (ASX: EVN) are likely holding onto their shares right now with Evolution booking a 54% share price gain in the last 12 months from $2.25 at this time last year to $3.47 at the time of writing.

But if you’re keen to check out some more speculative buys in the space, there are two smaller players who are flexing their muscles.

$317 million market cap emerging gold producer Silver Lake Resources Limited (ASX: SLR) is up 0.3% at the time of writing to 63c per share, with a balance sheet boasting zero debt and strong sales.

Silver Lake recently reported a 75% increase in Aldiss Mining Centre ore reserves with the company focused on is Mount Monger project with priority on targets proximal to established infrastructure.

Silver Lake is a cheapie in the gold space for investors who don’t mind a bit more of a speculative buy, but its fundamentals certainly look like a good bet.

At a $2.68 billion market cap St Barbara Ltd (ASX: SBM) eclipses Silver Lake, and its shares have zoomed upwards in the last 12 months – up 0.2% today to $5.15 at the time of writing – a rise of 87% from its $2.75 share price at this time last year.

St Barbara announced record fourth quarter gold production results late last week, also boasting a zero debt balance sheet with $344 million in cash.

A full FY19 guidance will be handed down this fortnight, but no surprises are expected with an update to growth projects to be detailed.

One to watch, but beware, if those results are favourable and you’ve not bought in, prices could shoot up fairly quickly.

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Motley Fool contributor Carin Pickworth has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. 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 disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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