Top fund manager sees potential for this ‘cheap gold stock’ to turn into ‘multi-billion-dollar’ company

The five year St Barbara Ltd (ASX: SBM) share price chart makes for some very ugly viewing.

This year alone, St Barbara shares have fallen almost 50%, hit by a falling gold price and poor results, with production for FY22 down 14%, profits down 70% and no dividend announced.

Writing in its August monthly update, leading fund manager Firetrail Australian Small Companies Fund noted the recent fall in the St Barbara share price came in sympathy with falling gold prices and the company’s softer than expected guidance for FY23.

Rather than be deterred by these challenges, Firetrail disclosed it added St Barbara to its portfolio, saying it “is one of the cheapest gold stocks globally.”

“Given the company’s significant resource base in WA, we expect it to play a leading role in much needed consolidation of the Australian small cap gold sector. We see potential for a multi-billion-dollar gold company to emerge in the next 12 months.”

In Thursday trading, the St Barbara share price is up 4.82% cents to 70.8 cents, giving the company a market capitalisation of $577.35 million. If Firetrail are correct in their assessment that this could be a multi-billion-dollar gold company, the upside potential could be enormous.

The post Top fund manager sees potential for this ‘cheap gold stock’ to turn into ‘multi-billion-dollar’ company appeared first on The Motley Fool Australia.

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Motley Fool contributor Bruce Jackson 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.

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