Q: Given the turmoil in the market at the present time, I want to increase my gold allocation and am considering these two companies. How would you rank them and what is your reason for the higher ranking? Do you have another producer in the sub-1M oz of gold production/yr range that you favor over these two companies? What would be your maximum allocation for gold stocks in today's market? I already have 1% positions in each of KNT and AGI.
5i Research Answer:
It is a tough call. EQX is much bigger and much cheaper, but has a lot of debt. EPS growth is expected to surge. AAUC has better stock momentum this year, and a better balance sheet, and also strong earnings growth expectations. We could go either way here, but would side with EQX for its size advantage. These two, plus the others mentioned in the question, would be our choices in the small producer category. WE would see 12% as a gold sector limit today.