Can Genesis Minerals shares keep running after a 195% surge in a year?

The Genesis Minerals Ltd (ASX: GMD) share price has been one of the ASX’s standout performers over the past year.

The gold miner’s shares have surged about 195% over the last 12 months and is up almost 12% in the past month alone. Its shares last closed at $7.30, just below the company’s record high of $7.63, which was reached in late December.

But with Genesis trading near historic highs, can its shares keep going?

Let’s find out.

Why Genesis has exploded higher

The biggest driver behind Genesis’s rally has been the gold price.

Gold prices have climbed sharply over the past year, hitting record levels as investors looked for safe places to park their money. Ongoing geopolitical tensions, expectations of lower interest rates, and strong demand from central banks have all supported gold.

For gold producers like Genesis, higher gold prices generally mean stronger revenue and better profits, which helps explain why investor interest has surged.

Genesis also operates in the Leonora gold region in Western Australia, an area known for high-quality gold assets. The company has been steadily growing production and improving its operations, which has boosted investor confidence.

What brokers are saying

Most brokers covering Genesis remain positive on the stock.

Broker consensus continues to lean towards a ‘buy’ rating, with analysts viewing Genesis as one of the better-positioned mid-tier gold producers on the ASX.

Recent broker updates show price targets generally ranging from around $7.30 to just over $8.00 per share. For example, UBS has a target of $8.05, while Citi recently lifted its target to $7.60.

Analysts have also pointed to Genesis’s growth profile, with expectations that production and earnings could continue to rise over the next few years.

Key risks

Despite the strong outlook, there are still risks investors should keep in mind.

After such a strong run, Genesis shares no longer look cheap, with a P/E ratio of 37.24. Other gold miners, such as Northern Star Resources Ltd (ASX: NST), currently trade on a lower P/E ratio of 21.89.

A lot of positive news is already reflected in the share price. This could limit future gains unless gold prices rise further or results surprise to the upside.

Another key risk is a pullback in the broader gold market. If prices were to fall, gold stocks like Genesis could also come under pressure.

What this means for investors

Genesis Minerals has delivered an outstanding run, backed by soaring gold prices and improving operations.

While brokers remain supportive, investors should remember that big gains often come with higher risk. From here, future returns are likely to depend on gold prices and Genesis continuing to execute well.

The post Can Genesis Minerals shares keep running after a 195% surge in a year? appeared first on The Motley Fool Australia.

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Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. 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.