Fortitude Gold

Stock: FTCO

Rating: Buy

Author: Waleed M. Tariq

Overview

  • Fortitude Gold operates in Nevada.
  • Gold Resource Corp.’s spin-off began OTC trading in 2021.
  • The company has five Walker Lane gold properties.

Bullish

  • Well-managed and financially stable, the company is well-run.
  • No long-term debt, larger profit margins, and regular dividends.
  • FTCO’s low AISC boosts its profitability above the competitors.

Bearish

  • In a gold bear market, lack of revenue diversification will impede top-line growth.
  • Production lags between the Isabella Pearl Mine and the Green Mile project.

Gold Market

  • Gold prices are up 1.5% YTD, exceeding the market and surviving Russia-Ukraine turbulence.
  • Since surpassing $2,050 in March, commodities prices have fallen. Mid-April, they fell from $1,980 per ounce.
Trading Economics
  • Global gold use is mostly in jewelry, investments, and industry.

Balance Sheet & Profitability

  • FTCO’s debt-free balance sheet contains a quarter in cash and cash equivalents and half in current assets.
  • Altman Z score over 12.5 indicates financial stability.
Docoh
  • Low AISC enhances FTCO’s profitability. Gross margin is 65.5%, net margin is 23.5%, EBITDA is 56%, and levered FCF is 12%.
FTCO Profitability Summary
Seeking Alpha

Valuation

  • PEG, PS, PB, and PCF. 13.32, 0.12, 1.26, 1.85, and 8.75. If FTCO’s indicators revert to industry medians, the stock might be worth $6.93 to $7.8.

Conclusion

  • I’m bullish on gold despite its current slump and volatility, which will help FTCO’s price. This stock’s high yield and potential up listing make it a buy.