We recently published a list of 8 Most Undervalued Gold Stocks To Buy According To Analysts. In this article, we are going to take a look at where Centerra Gold Inc. (NYSE:CGAU) stands against other most undervalued gold stocks to buy.

Gold has been on a remarkable run in 2024, solidifying its place as one of the top-performing assets of the year. Its impressive rally reflects not only the metal’s safe-haven status but also several key macroeconomic shifts. Central banks around the world, geopolitical tensions, and shifting market dynamics have all contributed to the surge in gold prices. Analysts are optimistic that this momentum will carry over into 2025. A Reuters report highlights that gold is benefiting from robust physical demand from China and renewed inflows into exchange-traded funds (ETFs), a trend that had stalled since April 2022. J.P. Morgan analysts have emphasized the importance of these ETF inflows, noting that their revival is essential for sustaining gold’s upward trajectory.

Adding further fuel to the rally is the U.S. Federal Reserve’s decision to initiate a rate-cutting cycle. This policy shift has weakened the dollar, making gold more attractive to investors. So far, gold has gained nearly 30% this year, an increase of nearly $595 per ounce, reaching a record high of $2,657 per ounce as of October 11. This is gold’s best annual performance since 2010, significantly outpacing the returns of major stock indices. UBS analysts believe that gold still has room to climb over the next six to twelve months. They argue that the Fed’s ongoing rate cuts, along with the approaching U.S. presidential election, could lead to higher market volatility, encouraging investors to further flock to gold as a hedge.

Goldman Sachs also maintains a bullish outlook, forecasting that prices could hit $2,700 by early 2025. They attribute this projection to growing central bank purchases, which have accelerated since Russia’s invasion of Ukraine. Central banks are increasingly diversifying away from the U.S. dollar to shield themselves from potential financial sanctions, making gold a preferred reserve asset. Goldman strategists also point to geopolitical uncertainties—such as trade tensions or rising U.S. debt—as additional catalysts that could drive gold prices even higher.

Several financial institutions are now projecting gold prices to continue climbing beyond 2025. ANZ sees gold reaching $2,805 by the end of 2025, while BofA forecasts a potential rise to $3,000 per ounce. Macquarie expects a peak of $2,600 per ounce in early 2025, with room for a surge toward $3,000. Similarly, Citi Research predicts prices could hover between $2,800 and $3,000 per ounce within the next two years.

This bullish outlook has attracted increased attention from investors and hedge funds alike, who view gold as a reliable investment in today’s uncertain economic landscape. The combination of falling interest rates, strong physical demand, and robust ETF inflows creates an ideal environment for gold prices to appreciate further. As a result, many investors are also turning to gold mining stocks as a more cost-effective way to gain exposure to the metal’s rally.

In the near future, many investors are eyeing gold as a safeguard against economic uncertainty. “Any case of turbulence in the economy,” explains FxPro senior market analyst Michel Saliby, “is why they’re keeping a decent portion of gold in their portfolio as a ‘safe haven.’” Analysts highlight strong demand from central banks as another key factor, with Joe Cavatoni from the World Gold Council noting that central bank gold purchases are well above the five-year average, driven by “heightened concern with inflation and economic stability.” China’s latest stimulus efforts aimed at boosting consumer spending are also expected to support retail investments in gold, further strengthening its performance, Saliby added.

However, experts warn against overinvesting; Saliby cautions investors not to fall for the “FOMO effect,” advising them to avoid chasing gains just because others are profiting and to maintain a clear risk management strategy. If geopolitical tensions ease, Saliby expects gold prices to correct by $50 to $80, though he remains optimistic that the spot price could surpass the $2,700 forecast for 2025, potentially reaching $2,800 or even $2,900. Still, future gains aren’t guaranteed, and gold has its skeptics. Some argue that gold isn’t always an effective hedge against inflation, suggesting that derivative-based investments may offer better protection against losses. The Commodity Futures Trade Commission has also warned that precious metals are highly volatile, with prices often rising only when economic anxiety is high—benefiting sellers the most during periods of instability, reported Fortune.

Keeping this context in view, we dive into eight undervalued gold stocks that analysts believe offer significant upside potential. These stocks not only provide investors with a cheaper entry point into the gold market but also stand to benefit from the broader rally in gold prices. With solid fundamentals and growth prospects, these gold stocks could be valuable additions to any portfolio looking to capitalize on the ongoing surge in the precious metal.

Our Methodology

For this article, we used the stock screeners to identify companies in the gold industry with a forward Price-to-Earnings (P/E) ratio of less than 15 as of October 11, 2024. We then reviewed the price targets set by analysts for each stock and compared them to their respective closing prices on October 11 to evaluate the upside potential. Additionally, we analyzed data from approximately 912 elite hedge funds tracked by Insider Monkey during the second quarter of 2024 to assess hedge fund ownership of each company. The stocks are ranked in ascending order based on their upside potential.

At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).

Aerial view of modern machinery operating in a gold mining site.

Centerra Gold Inc. (NYSE:CGAU)

Upside Potential: 31%

Forward Price to Earnings (P/E) Ratio: 10.35

Number of Hedge Fund Holders: 17

Centerra Gold Inc. (NYSE:CGAU) offers investors an exciting opportunity, standing out as one of the most undervalued gold stocks today. As of October 12, it trades at $7.11 per share, but analysts set a target price of $9.30, indicating an impressive upside potential of 31%. With a forward P/E ratio of just 10.35, it is a bargain in the gold mining sector, making it a strong candidate for those seeking undervalued stocks.

Centerra Gold Inc. (NYSE:CGAU) focuses on the acquisition, exploration, and operation of gold, copper, and molybdenum mines across North America, Turkey, and internationally. Its flagship assets include the Mount Milligan mine in British Columbia and the Öksüt mine in Turkey. The company’s diversified asset base offers exposure to multiple metals, making it well-positioned to benefit from fluctuating commodity prices.

In its Q2 2024 earnings, Centerra Gold Inc. (NYSE:CGAU) showcased solid financial performance. The company generated $94 million in operating cash flow before working capital adjustments, reflecting steady operations. Additionally, adjusted net earnings hit $47 million, or $0.23 per share, underscoring profitability even amid varying production volumes. The all-in sustaining cost (AISC) was $1,179 per ounce of gold, which is competitive within the industry.

Operationally, Mount Milligan produced over 38,000 ounces of gold and 13 million pounds of copper, with improvements expected in the second half of 2024. The company also advanced optimization efforts at this site, which will likely lower production costs in 2025. At the Öksüt mine, second-quarter output was over 51,000 ounces, with higher production expected in the second half, potentially boosting revenues further.

Centerra Gold Inc. (NYSE:CGAU) growth prospects remain strong. Ongoing exploration at its Goldfield project in Nevada may unlock additional resources, while the feasibility study at Thompson Creek could enhance molybdenum operations. The company’s commitment to ESG goals—like achieving 38% female board representation—demonstrates forward-thinking management, adding to its investment appeal.

In summary, Centerra Gold Inc. (NYSE:CGAU) solid fundamentals, operational efficiency, and commitment to sustainability make it a compelling buy. Trading at a discount with a significant upside potential, the stock is an attractive choice for investors looking to gain exposure to the gold sector.

Overall, CGAU ranks 3rd on our list of most undervalued gold stocks to buy according to analysts. While we acknowledge the potential of CGAU as an investment our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than CGAU but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.