Yamana Gold Inc. (USA) (NYSE:AUY) has followed the path of gold well enough to lose a lot of ground in the last few sessions. Gold lost over 10% in the recent days and the stock lost 20%+ but still, there are some indications, though possibly a bit too early to be confident enough, that this may turn out to be one of the best turnaround stocks in 2015.
One may note that Yamana Gold Inc. (USA) (NYSE:AUY) disappointed the street with its full year 2014 results. The adjusted earnings per share came in $0.05, sharply down compared to the consensus but the production grew by 17%. Keeping the free fall of gold in mind, the most important fact is that the all-in-sustaining-costs (ASIC) dropped to $899, not only a drop by 5% on a year on year basis but nearly $150 cheaper than the rival miners. This means that even at a low price of $1150, the company manages to maintain a margin of $250 roughly.
Various petroleum products including diesel are key inputs in mining and that’s why the crash in oil in the last few months should benefit the company a lot. Now the reasons for a possible turnaround don’t come only from the fundamental front but the technicals too.
One must check a really big time frame, the monthly charts to see that the current week’s low is perfectly coincident with the 2008 low, the lowest point in the last 10 years. The volume pattern shows an increase in the last few months, when the price was stuck in the range of $3.50-$4.50 and that can possibly be taken as a sign of accumulation by the smart money.
If the $3.20-30 levels manage to hold, then a rally to $4.50-$5.00 can be expected to emerge. Investors may take a small entry at the current price with a stoploss based on individual risk appetite.