Predicted $5 billion free cash flow puts Barrick Gold in Goldman Sach’s ‘conviction list’

Windsor Genova – Fourth Estate Cooperative Contributor

New York, NY, United States (4E) – Barrick Gold Corp. (NYSE: ABX), the largest gold mining company in the world, is now in the Goldman Sach’s Conviction Buy List (CBL), which includes stocks the investment bank’s researchers expect to outperform.

The upgrade from “buy” to inclusion in the CBL on Aug. 8 came as the company posted better gains than competitors Newmont Mining, Goldcorp and Market Vector Gold Miners ETF.

Goldman Sach analyst Andrew Quail also raised his price target on Barrick Gold to $22 from $21. From June, ABX stock has risen 7 percent and has been pushing to break through an important resistance level around $19.20, according to equity and hedge fund manager Douglas Ehrman.

“If the stock can break through a higher resistance around $21, the stock should have significant upside,” Ehrman said in his Seeking Alpha report last week.

The bullishness on Barrick was based on four factors. One, the company’s improving operation is seen leading to a decline in overall costs with its high-quality core assets contributing 80 percent to total cash flows.

Two, Barrick Gold could generate more than $5 billion in free cash flow (FCF) from the third quarter until 2018.

Three, continuing divestments this year and beyond complements strong FCF generation in lowering the company’s net debt and improve its financial flexibility. The firm sold $1.2 billion of non-core assets in the last 12 months, Quail said, according to Business News Network.

Four is copper production growth in the fourth quarter of 2015 with the restart of the Lumwana mine and commissioning of its Jabal Sayid project.

Stocks usually generate excitement when it joins the CBL. When master limited partnership MarkWest Energy Partners L.P. (NYSE: MWE) was added to the list in June, it was given a $78 price target. At the time, MarkWest closed at $70.64, has a 52-week range of $58.62 to $75.79 and has a consensus analyst target price of only $71.93. On Monday’s trading, MarkWest was up 0.39 percent or 29 cents to $75.47.

Coal company SunCoke Energy Inc. (NYSE: SXC) was also included in the CBL in June and assigned a $27 price target from its then closing price of $20.56, a 52-week range of $13.58 to $23.90, and the consensus price target of $25.33. At the close of trading on Monday, SunCoke shares are up nearly 1 percent or 24 cents to $24.42.

Goldman Sachs also takes out firms from the list like it did on Adidas last month following the company’s historic fiscal year 2014 net income fall that cut its 2014-2016 earnings estimate. Adidas entered the list in Octobe 2013.

The CBL is a good basis for novice and seasoned investors in choosing stocks to buy. But informed choices can be enhance with investor education. More so when such education that teaches fundamental and technical analysis is guided by experts.

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Red Bank, New Jersey-based investment education company InvestView (OTCQB: INVU) designed the web-based tools to simplify stock research and improve the investor’s research efficiency.

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