The gold price has been scaling new heights this year due to the prospect of interest rate cuts and rising tensions in the Middle East.
This means that most gold miners are benefiting greatly and generating bumper profits.
While this also means that many ASX gold stocks have raced higher and delivered big returns for shareholders in 2024, it isn't too late to jump on the gold train.
That's the view of analysts at Bell Potter, which see a lot of value in one sector-leading gold miner.
Which ASX gold stock?
The gold miner that the broker is tipping as a buy is Capricorn Metals Ltd (ASX: CMM).
It is the owner and operator of the Karlawinda Gold Project located in the Pilbara region of Western Australia and the Mt Gibson Gold Project in the Mid-West region of the state.
According to a note from this morning, the broker has retained its buy rating on the company's shares with an improved price target of $6.49.
Based on its current share price of $5.55, this implies potential upside of 17% for investors over the next 12 months.
What is the broker saying?
Bell Potter was pleased with the ASX gold stock's performance during FY 2024. A key highlight was its strong margins in the face of weather disruptions and lower production. It said:
The result was in-line with our forecasts, with the exception of a lower D&A charge. Record operating cash flows of $158m (vs $152m yoy) were achieved despite lower production yoy. This enabled the partial buyback of CMM's hedge book and ~$19m to be invested in pre-development activities at the Mt Gibson Gold Project (MGGP). The hedge book buyback was executed at spot price of A$3,482/oz, which compares favourably with the current spot price of ~A$3,700/oz. The result showed a solid EBITDA margin of 47% which is competitive with the top-performers in the sector and a good result after the weather-related disruptions of 2HFY24. CMM remains one of the lowest cost producers in the sector.
In light of the above, the broker remains very positive on Capricorn Metals and sees it as one of the best ASX gold stocks to buy now. It concludes:
CMM is a sector leading gold producer with a strong balance sheet, management team with an excellent track record of delivery and clear organic growth options to lift group production to 270kozpa. We retain our Buy recommendation.
