1 Gold Mining Stock Under $5 With Breakout Potential

Gold futures (GCQ24) have recently surged to new highs, hitting $2,488 on July 17, thanks to surging hopes for Federal Reserve interest rate cuts. Cash gold (GCY00) has jumped 15.5% this year, outpacing the S&P 500 Index’s ($SPX)14.5% returns.

Gold’s rally took a brief pause recently, but the stage is set for higher highs. According to the CME FedWatch Tool, there’s a 100% chance of a rate cut in September - and that means gold’s allure is growing. Lower rates are bullish for gold, a non-yielding asset, and ongoing geopolitical tensions are also pushing investors toward this safe haven. Analysts at Sprott, Citi, Goldman, and BofA have predicted gold prices moving all the way up to $3,000 against a supportive macro backdrop. 

Gold Royalty Corp. (GROY) a Canadian firm without the usual exposure to mining risk, is well-positioned to capitalize on the gold rush. Trading under $5, it has triple-digit upside potential, making it an attractive pick for investors eyeing breakout opportunities. Let’s take a closer look.

About Gold Royalty Stock

Gold Royalty Corp. (GROY) is a precious metals royalty company offering financing solutions to mining ventures. Incorporated in 2020 and based in Vancouver, GROY has swiftly built a diversified portfolio of over 200 royalties across the Americas. 

By acquiring royalties, streams, and interests at various mine stages, GROY provides investors with exposure to the gold market, without the usual mining risks or operating costs. Its strategic approach ensures a mix of short-, medium-, and long-term gains, positioning it as a unique player in the mining finance sector.

Having debuted on the market in March 2021 with 18 development-stage royalties, Gold Royalty's portfolio has since exploded. By Q1 2024, it held over 240 royalties, with six producing cash flow and another 14 in various development stages.

Valued at just $231.6 million by market cap, Gold Royalty is firmly in penny stock territory, down more than 75% from its September 2021 highs above $5 per share. 

GROY is also unprofitable, which means this stock is best reserved for investors with higher risk appetites. That said, analysts tracking the stock have only gotten more bullish in recent months, which means there’s also the potential for a big payoff for those who can stomach the heightened risk.

Gold Royalty Reports Preliminary Q2 Revenues

On July 22, Gold Royalty reported preliminary Q2 2024 results, with total revenue, land agreement proceeds and interest nearly quadrupling year over year to $2.2 million.

The second quarter marked a milestone, as Gold Royalty received its first royalty payment from IAMGOLD’s Côté Gold Mine, bolstered by steady cash-flowing royalties from the Borborema Project and the Canadian Malartic, Cozamin, and Borden Mines. Additionally, the company’s royalty generator model brought in $0.4 million from land agreement proceeds, reinforcing its growth story.

Gold Royalty said it’s on pace to meet its full-year target of approximately 6,500 to 7,000 GEOs and $13 million to $14 million in total revenue, land agreement proceeds and interest, assuming gold prices at $2,000 per ounce and copper at $4.25 per pound.

Previously, on May 13, Gold Royalty reported its fiscal Q1 results, boasting record revenue of $2.9 million – a 277.3% annual increase. While the revenue fell short of Wall Street's expectations, a quarterly loss per share of $0.01 surpassed estimates by 50%.

Analysts tracking GROY project the company’s losses in fiscal 2024 to stay unchanged from last year’s $0.03 per share, while revenue is expected to surge to $13.75 million. Losses are expected to shrink to $0.01 per share in fiscal 2025, with revenue increasing to $21.27 million.

Looking longer term, analysts forecast a compound annual revenue growth of 60% through the decade, with 100% revenue growth expected this year and a promising outlook for free cash flow generation.

Gold Royalty is expected to release its full Q2 earnings results after the market closes on Tuesday, Aug. 13. 

What Do Analysts Expect for Gold Royalty Stock?

Analysts are optimistic about Gold Royalty stock’s prospects, with a consensus “Strong Buy” rating overall. Out of the seven analysts in coverage, five advise a “Strong Buy,” and the remaining two recommend a “Moderate Buy.” 

That’s more bullish than a couple of months ago, when two analysts out of these seven called GROY a “Hold.”

The mean price target for GROY is $3.45, indicating an upside potential of 151.8% from current levels. The Street-high price target of $5.75, courtesy of H.C. Wainwright, suggests that the stock could rally as much as 319.7%.