Barrick Gold Corporation (USA) (NYSE:ABX) has turned out to be one of the biggest beneficiaries of the dismal US data and the short term rally in Gold. An unexpected drop in construction spending, weaker than expected ADP employment report and the factory activity expanding at its slowest rate in the last two years pushed the broader market down and the search for a safe haven was on. The resulting strength in gold pushed nearly all the gold stocks higher with Barrick Gold Corporation (USA) (NYSE:ABX) ending the session 9.58% higher. The weakness in the Dollar helped too.
Barrick Gold Corporation (USA) (NYSE:ABX) may look attractive to many investors as the stock, at current price, stands at just over 20 times the adjusted EPS of $0.68 for the fiscal year of 2014 and only 16 times of $0.86, the estimated EPS for 2015. Both the figures look cheap enough when seen against the industry average multiple. If the stock manages to command a fair multiple of 20, that may take it to $17 by the end of 2015. Add to that the annual dividend of $0.20 per share the company pays, taking the yield to 1.4% and the attraction gets stronger.
Technically, the short term looks interesting enough if the stock price manages to break above $13.00-50 levels. This small band of $0.50 represents one of the strongest supply areas and that is the reason that a successful breakout may take the stock to $18-$20 levels quite easily.
Using the Elliott Wave Theory, it could be speculated that the last major downmove is going on and either that has already ended at $10 levels or another minor part of the fall is pending yet. In that case, any breakout above $13 will most probably fail and a new low below $10 will mark the long term bottom.