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 Fortuna Mining Corp. (NYSE:FSM) 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 miners extracting precious metal deposits in a quarry.

Fortuna Mining Corp. (NYSE:FSM)

Upside Potential: 32%

Forward Price to Earnings (P/E) Ratio: 7.66

Number of Hedge Fund Holders: 17

Fortuna Mining Corp. (NYSE:FSM) is an intriguing pick for investors seeking undervalued gold stocks. With a forward P/E ratio of just 7.66 as of October 12, 2024, and an upside potential of 32%, based on a target price of $6.28 against the current share price of $4.75, it fits comfortably into this category. The company’s ability to capitalize on operational excellence across multiple regions makes it a compelling investment.

Founded in 1990 and headquartered in Vancouver, Canada, Fortuna Mining Corp. (NYSE:FSM) operates gold and silver mining projects in several countries, including Argentina, Mexico, Peru, Côte d’Ivoire, and Burkina Faso. Its most prominent asset, the Séguéla gold mine in Côte d’Ivoire, covers 62,000 hectares and has become a key contributor to the company’s growth. Formerly known as Fortuna Silver Mines, the firm rebranded to Fortuna Mining Corp. (NYSE:FSM) in June 2024 to reflect its diversified portfolio in both precious and base metals.

Fortuna Mining Corp. (NYSE:FSM) Q2 2024 financial performance underscores its potential. The company generated $260 million in revenue, with gold contributing 81% of total sales. The business reported $113 million in adjusted EBITDA, reflecting a healthy 43% margin over revenue, and produced 116,000 gold equivalent ounces during the quarter. Free cash flow from operations came in at $39 million, with cash flow per share hitting $0.30, signaling strong operational efficiency.

A major highlight from Q2 was the successful ramp-up of the Séguéla processing plant, which operated 36% above its design capacity, mitigating power disruptions from the national grid. The company also advanced key capital projects, including the Lindero leach pad expansion, expected to be completed by Q4 2024, ensuring reserves for the next decade.

Fortuna Mining Corp. (NYSE:FSM) solid balance sheet strengthens its position, with $350 million in liquidity and a low net debt-to-EBITDA ratio of 0.2. A recent oversubscribed $172 million convertible notes placement further reduced borrowing costs, improving financial flexibility for future projects.

With effective cost management, including an all-in sustaining cost (AISC) of $1,097 per gold ounce, and promising exploration success at Seguela’s Kingfisher discovery, Fortuna Mining Corp. (NYSE:FSM) is well-positioned for growth. Its ability to perform across varying market cycles makes it a prime candidate among undervalued gold stocks.

Overall, FSM ranks 2nd on our list of most undervalued gold stocks to buy according to analysts. While we acknowledge the potential of FSM 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 FSM 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.