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 Gold Fields Limited (NYSE:GFI) 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 a large gold mine in South Africa with many excavators and trucks working.

Gold Fields Limited (NYSE:GFI)

Upside Potential: 22%

Forward Price to Earnings (P/E) Ratio: 8.53

Number of Hedge Fund Holders: 20

Gold Fields Limited (NYSE:GFI) is a global gold producer with mining operations spread across Chile, South Africa, Ghana, Canada, Australia, and Peru. The company also explores copper and silver, adding diversity to its portfolio. As of October 12, Gold Fields Limited (NYSE:GFI) has a forward P/E ratio of 8.53, suggesting it is trading at an attractive valuation relative to its future earnings. With a current share price of $15.40 and a target price of $18.79, the stock offers an upside potential of 22%, making it a compelling choice for inclusion in our list of undervalued gold stocks.

In Q2 2024, Gold Fields Limited (NYSE:GFI) reported solid financials, surpassing analysts’ earnings expectations with EPS of $0.4344 compared to a forecast of $0.34. Despite production setbacks, the company generated $320 million in adjusted free cash flow, thanks to higher gold prices. Although first-half production saw a 20% year-over-year decline, the outlook for the second half remains optimistic. The management expects production to pick up as the Salares Norte mine ramps up and operational challenges at South Deep, St Ives, and Gruyere are addressed.

Operationally, the company faced headwinds like adverse weather impacting Gruyere’s operations and supply disruptions. However, Gold Fields Limited (NYSE:GFI) has taken corrective actions, including recovery plans at several mines, ensuring a stronger performance in the latter half of the year. Management remains confident in achieving their annual production guidance of 2.05–2.15 million ounces, with over 1.2 million ounces expected in H2 2024.

The company’s financial discipline is further reflected in its commitment to shareholder returns, distributing 40% of its normalized earnings as dividends. Additionally, strategic moves such as the recent acquisition of Osisko Mining’s Windfall project highlight its focus on long-term growth. Gold Fields Limited (NYSE:GFI) is also progressing in sustainability initiatives, with renewable energy projects underway at its Australian mines.

In conclusion, Gold Fields Limited (NYSE:GFI) attractive valuation, solid cash flow generation, dividend policy, and strategic growth initiatives make it an undervalued opportunity in the gold sector. As production normalizes in the second half of 2024, investors can expect the stock to unlock significant value, aligning with its strong fundamentals and the promising outlook ahead.

Overall, GFI ranks 6th on our list of most undervalued gold stocks to buy according to analysts. 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.

READ NEXT: $30 Trillion Opportunity: 15 Best Humanoid Robot Stocks to Buy According to Morgan Stanley and Jim Cramer Says NVIDIA ‘Has Become A Wasteland’.

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