Why this fund manager sees major upside potential for the Northern Star share price

a woman wearing a sparkly strapless dress leans on a neat stack of six gold bars as she smiles and looks to the side as though she is very happy and protective of her stash. She also has gold fingernails and gold glitter pieces affixed to her cheeks.

a woman wearing a sparkly strapless dress leans on a neat stack of six gold bars as she smiles and looks to the side as though she is very happy and protective of her stash. She also has gold fingernails and gold glitter pieces affixed to her cheeks.The Northern Star Resources Ltd (ASX: NST) share price isn’t escaping the wider market selloff today.

Northern Star shares closed on Tuesday trading for $8.06, down 3.13%.

The Northern Star share price joined the wider selling action, fuelled by hot running inflation figures and fears of aggressive interest rate hikes out of the United States.

This saw US markets fall sharply yesterday (when the ASX was closed for the Queen’s Birthday holiday) and caused similar angst here today, with the All Ordinaries Index (ASX: XAO) closing down 3.70% at the end of the day.

With gold prices also down around 2.5% since the US inflation figures were released on Friday, the S&P/ASX All Ordinaries Gold Index (ASX: XGD) also closed down 2.06% today.

But, according to Catapult Wealth portfolio manager Tim Haselum, gold stocks, and particularly the Northern Star share price could have a strong year ahead.

Low debt and long mine life

Northern Star has a current market cap of approximately $9.4 billion. Focused on gold, the company produces and explores in Western Australia, the Northern Territory and the US state of Alaska. The miner pays a trailing dividend yield of 2.4%, fully franked.

Commenting on the outlook for Northern Star, Haselum said (courtesy of The Advertiser):

The main variables here are the gold price, currency and production volumes. Like all commodity companies, NST reported rising costs as wages and transport expenses keep pushing higher. Despite this, NST ha a very low debt, strong track record for management and their mines are relatively long life.

Haselum acknowledged the rising interest rate environment, but added, “We think you have to throw the old economic textbooks out as we could still see strength in gold valuations and it continues to be an attractive store of wealth.”

Catapult Wealth has a buy rating on the miner and a 12-month target of $11.88 for the Northern Star share price.

Northern Star share price snapshot

The Northern Star share price hit all-time highs in November 2020.

This year the miner has been struggling, with shares down 14% in 2022. That compares to a year-to-date loss of 10% posted by the S&P/ASX 200 Index (ASX: XJO).

The post Why this fund manager sees major upside potential for the Northern Star share price appeared first on The Motley Fool Australia.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes could be the “five best ASX stocks” for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now

See The 5 Stocks
*Returns as of January 12th 2022

(function() {
function setButtonColorDefaults(param, property, defaultValue) {
if( !param || !param.includes(‘#’)) {
var button = document.getElementsByClassName(“pitch-snippet”)[0].getElementsByClassName(“pitch-button”)[0];
button.style[property] = defaultValue;
}
}

setButtonColorDefaults(“#43B02A”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43B02A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#fff”, ‘color’, ‘#fff’);
})()

More reading

The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

from The Motley Fool Australia https://ift.tt/0bq5lzV

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s