Investors should consider buying the world's largest gold miner to help make their portfolios glitter. By Dan Victor

   -- Newmont is generating strong earnings and record free cash flow amid 
      climbing gold and silver prices. 
 
   -- Even following a big rally this year, the stock is trading at an 
      attractive valuation. 
 
   -- Newmont is a good option for investors to capture exposure to rising 
      precious metal prices within a diversified portfolio. 

Visualizing 5.6 million ounces of gold can be quite striking.

That's enough to form 14,000 Good Delivery gold bars, the standard for international trade and the kind often shown in movies -- enough to extend the length of approximately 33 football fields. It's also how much gold Newmont expects to produce this year from its core portfolio, holding the spot as the world's largest gold miner, and the only one included in the S&P 500 index.

The Denver-based company is in an enviable position amid a historic bull market for precious metals. Turbulent macroeconomic indicators and uncertainty surrounding the Federal Reserve's next steps on interest rates have propelled the price of gold to a record high, to $3,400 per ounce, up 27% this year.

Newmont stock, at around $69, has climbed an even more impressive 85% thus far in 2025, driven not just by a sharply higher outlook for its sales and earnings, but also a corporate transformation meant to unlock shareholder value.

The bullish case for Newmont is built on more than just a bet for further upside in gold prices, though there is plenty of optimism on that front as well. "In an environment marked by geopolitical instability and growing fiscal and economic uncertainty, investors are increasingly turning to gold as an alternative to traditional asset classes and institutions," says Ryan McIntyre, a managing partner at Sprott, an asset manager specializing in investing strategies for precious metals.

While central banks have been steadily accumulating gold and diversifying their foreign-exchange reserves, aggregate flows into sector exchange-traded funds still have room to catch up, McIntyre tells Barron's. ETF gold holdings remain 17% below their peak, he says, a setup suggesting further gold price appreciation, making the environment particularly promising for mining stocks.

Newmont's stock price momentum and budding market enthusiasm have been a long time in the making. The company aggressively pursued growth through a pair of blockbuster acquisitions in the past decade -- first with Goldcorp in 2019, and then with Newcrest Mining in late 2023. These deals added a portfolio of tier-one assets, including large copper and silver reserves, but also billions in balance sheet debt.

The strategy was hampered by a series of operational headwinds, including integration challenges and unexpected geological setbacks. Separately, supply-chain disruptions and inflationary cost pressures squeezed profit margins. Even with the latest rally, the stock remains below its 2022 all-time high of over $86 and is nearly flat to the level it first reached in 2011, highlighting a turbulent decade for the mining giant.

It now appears the company has finally hit pay dirt.

In 2024, Newmont announced a bold corporate overhaul aimed at streamlining its portfolio to focus on its highest-quality assets. In just the past year, Newmont generated $3.8 billion in proceeds by shedding six operations and two projects, setting the stage for an improved cost structure and stronger profitability.

The company's second-quarter financials reflect this strategy's early success. Though gold production was down 4% year over year from its asset sales, the all-in sustaining cost per ounce also declined by 4%. Combined with rising gold prices and higher ore grades at its Cadia and Peñasquito mines, this enabled Newmont to generate a record $1.7 billion in quarterly free cash flow -- nearly triple the prior year's result. Net debt has since fallen to $1.4 billion from a high of $6.4 billion at the end of 2023.

Newmont's board of directors, projecting confidence in the company's outlook, increased the authorization for share repurchases by $3 billion. This represents a 4% buyback yield alongside a 25-cent-per-share quarterly dividend that yields 1.5%.

While Newmont may not offer the rapid production growth of a speculative junior miner, its underlying value makes it a compelling investment opportunity. The stock appears cheap, trading at a price/earnings ratio of 13, marking a deep discount to the broader market and sector peers like Agnico Eagle Mines, which trades at a multiple of 18.

Canaccord Genuity analyst Carey MacRury points out that Newmont is trading at a price-to-net-asset-value $(NAV)$ ratio of just 0.7, based on his estimates of the company's future mining cash flows. This is a considerable bargain, especially when compared with the company's average price/NAV of roughly 1.0 since 2018, and its peak of 1.5 in 2022. MacRury's report praised Newmont's "robust cash generation," citing solid production and cost performance that underpinned a strong second-quarter result. MacRury has a Buy rating on the stock with a target price of $86, implying a 25% gain from its closing price on Tuesday.

The market has yet to fully price in Newmont's new profile, but its scale, asset quality, and deleveraged balance sheet could support a more premium valuation. It appears better positioned than its sector peers to navigate the risk of a prolonged gold price correction in the future. On the other hand, if gold prices continue to run toward $4,000 an ounce or more, the stock's upside could be significant.

Overall, Newmont's combination of well-rounded fundamentals with potential for share price appreciation makes it an excellent choice for gold exposure in diversified portfolios.

The Technical View

Newmont is trading at a three-year high and has nice momentum. On a longer-term weekly time frame, the stock has broken above a bullish inverse head and shoulders, with a pivot near $60, which would carry a measured move toward $90 by mid-2026. Newmont deserves credit for its relative strength, holding up well despite some recent erratic trading in the underlying metal prices. -- Doug Busch

Write to Dan Victor at dan.victor@barrons.com.

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August 15, 2025 21:31 ET (01:31 GMT)

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