We recently published a list of 8 Cheap Gold Stocks To Buy According to Hedge Funds. In this article, we are going to take a look at where Gold Fields Limited (NYSE:GFI) stands against the other cheap gold stocks to buy according to hedge funds.

Gold has been on an impressive rally in 2024, positioning itself as one of the best-performing assets of the year. This surge is largely driven by various macroeconomic factors, including central bank policies and geopolitical uncertainty. According to a report by Reuters, major banks expect the gold bull run to extend into 2025 due to a combination of strong physical demand from China and substantial inflows into exchange-traded funds (ETFs). J.P. Morgan analysts noted that the revival of large ETF inflows, which had been absent since April 2022, is crucial for sustaining the rally. The U.S. Federal Reserve’s recent decision to initiate a rate-cutting cycle is also expected to provide additional momentum for gold prices.

So far this year, gold has gained over 27%, or nearly $570 per ounce, and recently hit a record high of $2,639.95 per ounce. This marks its highest annual rise since 2010 and a stark outperformance compared to major stock indices. UBS analysts believe that despite these gains, gold has more room to grow over the next 6 to 12 months. They attribute this optimism to the Fed’s ongoing interest rate cuts and the upcoming U.S. presidential election, which could increase market volatility and further drive investors toward safe-haven assets like gold.

A second report from Goldman Sachs Research supports this bullish outlook, forecasting gold prices to reach $2,700 by early 2025. Strategists point to several factors that could push the precious metal to new heights. Firstly, central bank purchases of gold have accelerated since Russia’s invasion of Ukraine, as these institutions seek to diversify away from the U.S. dollar and mitigate the risks posed by potential U.S. financial sanctions. The bank also highlights that gold is currently their preferred near-term long position due to its potential as a hedge against financial and geopolitical risks.

In addition, strategists believe that further Fed rate cuts will likely bring Western investors back into the gold market, which has seen relatively lower participation from this group during the recent rally. Another key driver could be geopolitical shocks, such as additional tariffs or heightened debt concerns in the United States. Should the U.S. debt burden continue to rise, it could lead to increased credit-default swap spreads, enhancing gold’s appeal as a safe-haven asset.

The strong outlook for gold is echoed by various financial institutions, with several projecting prices to continue climbing over the next few years. ANZ anticipates gold to reach $2,805 by the end of 2025, while BofA sees the potential for prices to touch $3,000 per ounce. Similarly, Macquarie expects gold to hit a peak of $2,600 per ounce in Q1 2025, with a possible spike toward $3,000. Citi Research’s baseline projection ranges between $2,800 and $3,000 per ounce by 2025.

Given these forecasts, investors are increasingly looking at gold as a reliable investment option in the current uncertain economic environment. The continued interest rate cuts by the U.S. Federal Reserve, coupled with strong physical demand and robust ETF inflows, create a favorable backdrop for further appreciation in gold prices. Consequently, several hedge funds have started accumulating positions in gold mining stocks, viewing them as a cost-effective way to gain exposure to the precious metal’s rally.

In this article, we explore eight cheap gold stocks to buy according to hedge funds. These stocks offer investors an opportunity to benefit from the anticipated gold bull market at relatively lower prices. With solid financials and potential for significant upside, these gold stocks could be attractive additions to any portfolio looking to capitalize on the ongoing surge in gold prices.

Our Methodology

For this article, we utilized the Finviz stock screener to identify stocks within the gold industry that have forward price-to-earnings (P/E) ratios below 15 as of September 29. From this initial list, we focused on eight stocks that are most favored by institutional investors. These stocks were then ranked in ascending order based on the number of hedge funds holding stakes in them as of Q2 2024.

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 a large gold mine in South Africa with many excavators and trucks working.

Gold Fields Limited (NYSE:GFI)

Number of Hedge Fund Holders: 20 

Forward P/E Ratio as of September 29: 8.92

Gold Fields Limited (NYSE:GFI) is a leading gold producer with a diversified portfolio of assets spread across Chile, South Africa, Ghana, Canada, Australia, and Peru. Established in 1887 and headquartered in Sandton, South Africa, the company also explores for copper and silver deposits. In the second quarter of 2024, the stock attracted 20 hedge fund holders, up from 18 in the previous quarter, highlighting increased institutional interest.

Gold Fields Limited (NYSE:GFI) exceeded market expectations in Q2 2024 by reporting earnings per share (EPS) of $0.4344 against the forecasted $0.34, showcasing solid operational performance despite facing production challenges. The company’s financial health remains robust, with all its mining operations generating positive adjusted free cash flow despite a 20% year-over-year decline in overall production. Gold Fields Limited (NYSE:GFI) achieved a strong $320 million in adjusted free cash flow from operations, driven by higher gold prices that compensated for production setbacks.

The company’s financial strength is further underpinned by its diversified asset base. Its Australian mines contributed nearly half of the group’s production and cash flow in the first half of 2024, while operations in Ghana accounted for about a third. Additionally, the announcement of the acquisition of Osisko Mining’s Windfall project and ongoing discussions for the approval of the Tarkwa/Iduapriem joint venture in Ghana are expected to bolster Gold Fields Limited (NYSE:GFI) production capabilities and future growth prospects.

Gold Fields Limited (NYSE:GFI) also remains committed to shareholder returns, paying a dividend of ZAR0.30 per share, representing 40% of its normalized earnings for the half-year. While production guidance for 2024 has been revised down to between 2.05 million and 2.15 million ounces due to operational challenges at its South Deep and Cerro Corona mines, the company anticipates a stronger performance in the second half of 2024, with an expected output of over 1.2 million ounces. With a diversified portfolio, solid cash flow generation, and a strong dividend yield, Gold Fields Limited (NYSE:GFI) presents an attractive investment opportunity for value-focused investors looking to gain exposure to the gold mining sector.

Overall GFI ranks 1st on our list of cheap gold stocks to buy according to hedge funds. While we acknowledge the potential of GFI 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 GFI 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.