Is Polymetal a bargain compared to its competitors or are there better options out there? Let’s explore.

Will FTSE 100 mining stocks go higher?

Three Footsie mining stocks on my watchlist have made flying starts to 2022.

The Anglo American (LSE: AAL) share price climbed 34% following a $12bn increase in operating profit and a $1.7bn net debt reduction. Over a third of the miner’s 2021 EBITDA came from platinum group metals. Looking ahead, the company should prove resilient to geopolitical uncertainty. Anglo American, which is up 33% in a year, operates on six continents and has no Russian presence, unlike Polymetal.

Antofagasta (LSE: ANTO) is also racing ahead of the Polymetal share price, rising 22% this year (but down 10% over 12 months). As copper mining is the lifeblood of this Chilean multi-national’s business, shareholders will be encouraged by Goldman Sachs‘ 12-month copper price target of $13,000 per tonne. Antofagasta can build on a robust financial position after earnings per share rocketed by $87.80 last year.

Rio Tinto (LSE: RIO) stock completes the trio — it’s up 25% in 2022, but only up 4% in a year. Iron ore production accounts for almost 78% of its underlying earnings. In 2021, Rio Tinto generated +60% net cash and ordinary dividends per share rose 71%. Moreover, China’s iron ore imports remain stable in 2022, despite its economic slowdown. This is good news for the Rio Tinto share price.

With global interest rates rising, metal prices and mining stocks may fall so all of these shares come with risks. However, I believe the metals bull market could just be beginning as production seems unlikely to meet demand. For me, the outlook remains positive while supply side issues persist.

Will the Polymetal share price go lower?

Polymetal’s focus is precious metals, particularly gold and silver. It has operations in Russia and Kazakhstan. Although it consistently increased production over five years, the share price has been hurt by liquidity troubles caused by sanctions on Russian banks.

In further worrying signs, Polymetal postponed its decision on its 2021 final dividend payment. And Deloitte recently resigned as its auditor, threatening its London Stock Exchange listing.

Arguably, the stock’s substantial decline and a dirt cheap price-to-cash-flow ratio of 1.4 mean the risks it faces are priced in. Nascent plans to separate its Kazakh assets from the rest of the business lifted the Polymetal share price somewhat in recent days.

Nonetheless, I’m pessimistic about Polymetal shares. Headquartered in Cyprus, it avoided direct sanctions like those levied on Roman Abramovich’s Evraz. In a rapidly evolving situation, this could change.

The mining shares I’d buy now

Exposure to metals plays an important role in my diversified portfolio. I’m impressed by all three FTSE 100 stocks on my watchlist. They have strong balance sheets and are collectively spread across different geographies and commodities. I’d divide any spare cash between them.

By contrast, I see potential for further declines in the Polymetal share price. It’s simply too risky for me to buy at present, so I’m looking elsewhere for a solid gold miner.

The post Will FTSE 100 miners outshine the Polymetal share price in 2022? appeared first on The Motley Fool UK.

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Charlie Carman has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Significant sales growth

‘Variety goods’ retailer B&M European Value (LSE: BME) is a good example of the sort of stock I’d be interested in. Last month’s Q1 trading update sounded pretty bullish to me.

The company said it had made a “strong start” to its financial year with revenue up 3.1%. Naturally, this rate of growth was a lot lower than last year, due to a lack of lockdown-related stockpiling by shoppers. A normalisation of grocery spending was also seen at the company’s Heron Foods business. 

Still, the fact that sales “remain significantly above pre-pandemic levels” gives some indication this is a company going in the right direction. It should also mean the rapidly-appreciating dividends are safe too.

Looking ahead, B&M said there’s a lot of uncertainty as to where consumer spending will go in the near term. I therefore wouldn’t be surprised if the shares lost some of their steam over the next few months.

Notwithstanding this, I’d leave space for this 3.6%-yielder in my income portfolio.

7% yield!

With the gold price failing to respond to the threat of rising inflation, FTSE 100 precious metals miner Polymetal (LSE: POLY) may appear a controversial income pick.

However, I think there’s a lot to like about the company. The £7bn-cap scores high on quality metrics such as returns on capital and operating margins. I also see it as a potential hedge should markets, particularly the US, finally take a breather. 

Nevertheless, I’d need to keep in mind is that Polymetal has a relatively small ‘free float’ for a FTSE 100 business. This is the proportion of the company’s shares actually trading. This can accentuate moves up when the stock is in demand. Unfortunately, the opposite is also true. 

Then again, it might be argued that the dividend stream is worth the risk. As things stand, Polymetal yields a little over 7%, covered by profits. That’s a lot of income for me to reinvest and compound over time.

It won’t be an easy ride and some diversification is still essential. However, I’d be prepared to buy today. 

Defensive dividends

A final FTSE 100 stock I believe offers me an enticing balance of quality and income is consumer goods giant Unilever (LSE: ULVR).

Like B&M, Unilever doesn’t boast the highest yield in the lead index. In fact, the forecast 3.5% yield is half that offered by POLY. Even so, it’s slightly higher than that generated by the index as a whole (3.4%).

Now, some might say that isn’t much additional compensation for the risks involved in buying a company’s stock. That argument is valid. Unilever’s share price has, after all, been in the doldrums of late, due to inflationary pressures impacting margins.

Then again, I believe the company’s portfolio of ‘sticky’ brands makes it more defensive than most FTSE 100 members. Besides, the company regularly raises its payout and, again, dividends look safely covered by profits. Returns on capital, while slipping recently, remain very decent.

Embracing my contrarian side, I’d buy ULVR for my own portfolio today.

The post FTSE 100: 3 quality dividend stocks to buy in August appeared first on The Motley Fool UK.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended B&M European Value and Unilever. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Why might gold keep rising?

Last week, the US Federal Reserve implied that it was ready to inject further stimulus into its economy via another bout of money-printing. This ‘whatever it takes’ strategy, and the possibility of other central banks following suit, increases the risk of inflation picking up. 

Inflation isn’t known as the ‘silent killer’ for nothing. The rise in the cost of things means the spending power of any money you have is reduced. Investors try to counter this by moving into assets that tend to hold their value.

Another, related reason that gold might continue to soar is the possibility that we’ll get a second wave of the coronavirus, perhaps coinciding with seasonal flu. This could bring forth another bout of volatility in stocks, making it more likely that investors will seek solace in things that are negatively correlated with equities.

On top of all this, you have growing tension between China and US and the forthcoming election across the pond.

With these hurdles and no definite vaccine in sight, demand for the shiny stuff is unlikely to fall away any time soon.

How to play the gold rush

There are plenty of ways for Foolish investors to get involved. That said, the most appropriate option will depend on your financial goals, investment horizon and risk tolerance. 

Perhaps the least ‘dangerous’ way of tapping into gold’s popularity is via a fund that tracks its price. The iShares Physical Gold ETC is one of the most popular options available. 

For those looking for bigger gains, a diversified fund specialising in gold miners could be the way to go. The iShares Gold Producers UCITS ETF is one I hold.

For the brave…

If you really want to a leveraged play on the gold price however, you’ll need to buy single company stocks. You could buy a large, established miner like Polymetal or Centamin. You could also look for promising minnows.

A quick glance at the share price graph of a company like Greatland Gold shows just how profitable the latter strategy can sometimes be. Those who invested around the time that I first wrote about the company last August would have made a killing. Its shares are up 700% since then!

With recent talk of “exceptional” results from its ongoing drilling programme in Western Africa, IronRidge Resources could be next to jump. So too could be Hummingbird Resources, which has operations in Mali and Liberia. It wouldn’t surprise me if either were bid for at some point. 

As always, those tempted to invest in stocks like these need to be aware of what they’re getting into. Expect regular double-digit percentage share price moves in both directions due to their lack of liquidity. A large bid-offer spread (the difference between what you can buy and sell a stock for) means you’ll also need to make a decent gain after buying just to get back to break-even. 

Mining stocks are also no place for impatient investors. Many don’t make it into production because of the costs involved. For those that can sit on their hands, however, the wait could be worth it. 

The post The gold price is on a tear. I think those buying now could still strike it rich appeared first on The Motley Fool UK.

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Paul Summers owns shares in iShares Physical Gold ETC and iShares Gold Producers UCITS ETF. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

According to my calculations, the two are currently the bottom-ranked FTSE 100 companies. They’re poised to be pushed out of the blue-chip index by FTSE 250 firms Polymetal International and Hikma Pharmaceuticals, which both occupy automatic promotion slots.

Do I think now is a good time to buy shares in any of the four companies?

No spark at Marks

Marks & Spencer has been in the FTSE 100 ever since the index was established in 1984. It narrowly escaped demotion at the last quarterly review, but I think it would take a miracle for it to dodge the bullet this time around.

The sinking value of the company, and the humiliation of its demise from blue-chip bellwether to just another mid-cap retailer, is symbolic of the troubles on the UK high street, but also testament to M&S’s repeated failures to successfully adapt its business over the last two decades.

It may have a single-digit P/E and high dividend yield, but the bottom line is this is a structurally challenged company in a structurally challenged sector. Is it a stock I need to own? No, has been my answer for a long, long time. And I continue to see it as one to avoid.

Mad cap

Arguably, Centrica, which also trades on a low P/E and high yield, is a similarly challenged company. However, it’s a utility, not a retailer, and while it has some similarities with M&S in the consumer-facing part of its business, the main challenges it faces are rather different.

Regulatory headwinds, notably a price cap on certain tariffs imposed on energy companies earlier this year, have had a damaging impact on profitability in the sector, and even on the viability of some companies. History suggests heavy-handed regulatory price caps, which produce market distortions and unintended disincentives, get discarded sooner or later. And for this reason, I wouldn’t entirely write Centrica off.

For sure, it faces a host of challenges, but I think the business can survive and recover when the madness and pernicious consequences of price caps become apparent, and policy is changed. Personally, I wouldn’t buy the stock today, but if I owned it I’d be inclined to continue to hold.

Two I’d buy

I named gold miner Polymetal as my top share for 2019 at the start of the year. Despite the strong rise that’s taken it to the brink of entry into the FTSE 100, I still see value in the stock and rate it a ‘buy’. It has a low double-digit P/E and forecast high-teens earnings growth, as well as a decent 4% dividend yield.

Generic medicines firm Hikma is more highly rated, on a high-teens P/E and with a sub-2% dividend yield. The company has yo-yoed in and out of the FTSE 100, but I think the long-term outlook for the business is so promising that it’ll become a fixture in the top index in due course. As such, I also rate this one a ‘buy’.

The index changes announced by the FTSE on Wednesday will take effect from Monday 23 September.

The post Marks & Spencer and Centrica set for FTSE 100 exit. Time to buy? appeared first on The Motley Fool UK.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Hikma Pharmaceuticals. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Heavy metal investing

Russian gold and silver miner Polymetal International (LSE: POLY) may not be familiar to some retail investors, perhaps because the company has developed a habit of yo-yoing in and out of the top index as the demand for commodities has ebbed and flowed.

Notwithstanding this, recent concerns over stalling global growth, Donald Trump’s tussle with China and Brexit look set to elevate Polymetal back to the FTSE 100 as investors rush to acquire ‘safe’ assets such as gold.

Earlier this week, the £5.5bn cap stated that H1 revenue and adjusted earnings had been 20% and 34% higher respectively year-on-year. The company also declared that it was on track to meet its production guidance for the full year of 1.55 million ounces (Moz) of gold equivalent and that it was considering dipping its toe in the rare earth metal space in the hope of capitalising on the increasing demand for commodities used in electric cars.

At the time of writing, the shares change hands on 12 times FY19 forecast earnings and offer a secure 4% yield. As if the latter weren’t attractive enough, Polymetal is also considering a special dividend after hitting debt targets thanks to the rising gold price.

If you believe that the macro-economic landscape is only going to deteriorate further over the next year or so, there could be even more upside ahead.  

Relegation candidates

Potentially going the other way in the forthcoming shuffle are British Gas owner Centrica (LSE: CNA) and DIY behemoth Kingfisher (LSE: KGF).

Centrica’s woes are numerous and well-publicised — one of the biggest being its struggle to retain customers. Having recognised the ease with which they can switch, the increasingly savvy energy consumer is no longer loyal to a particular provider and many have made the move to more nimble suppliers to cut their household bills.

Understandably this development — combined with the introduction of caps on energy prices — has impacted on profits which have in turn forced Centrica to slash its dividend. The threat of eventual nationalisation if Jeremy Corbyn were to get the keys to Number 10 and the likelihood that holders would get a poor price for their shares hasn’t helped sentiment either.

Having more than halved in value since the end of August 2018, Centrica’s descent into the FTSE 250 looks pretty likely. 

The state of affairs over at Kingfisher isn’t much better. Its share price is now down 30% since this time last year.

The firm’s Q1 results — revealed back in May — were a mixed bag with decent trading at Screwfix and B&Q in the UK offset by ongoing troubles in France.

As is to be expected after falling so far, Kingfisher’s shares now trade on a valuation of just under 9 times forecast earnings for the current financial year. The 5.6% yield, while secure for now, might not be enough to keep income investors interested if the company does indeed fall out of the index and others rush to sell.

Relegated of not, it looks like ex-Carrefour man Thierry Garnier will have his work cut out when he takes the reins on 25 September, a week after the company posts half-year numbers.

The post One nailed-on winner (and two potential losers) from the FTSE 100 reshuffle appeared first on The Motley Fool UK.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I believe the three FTSE 250 stocks you’ll read about in this article fit the bill. I reckon they’re capable of delivering steady and sustainable annual earnings and dividend growth in the mid-to-high single-digit region, and I’d be happy to buy them in May and hold them for the long term.

Healthy prospects

When it comes to steady and sustainable growth, Primary Health Properties (LSE: PHP) is an outstanding candidate. This specialist real estate investment trust is focused on primary medical assets in the UK and Republic of Ireland.

These assets are local hubs, housing GP surgeries, pharmacies and other medical services. Occupancy is consistently close to 100%, over 90% of rental income is government backed, and most of the rents are subject to fixed or inflation-linked uplifts. This low-risk, non-cyclical backdrop has enabled Primary Health to deliver 22 years unbroken dividend growth.

When I last wrote about the company, it had agreed an all-share merger with smaller peer MedicX. I viewed the deal favourably, and expected shareholders of both firms to back it, which they subsequently did.

A recent post-merger research report by Hardman & Co forecasts average annual earnings growth of over 10% for the next two years, with average annual dividend growth at a little over 4%. Hardman suggests the earnings growth trend will feed through to accelerating dividend growth at some stage. Buyers of the stock at 131p today should secure an initial dividend yield of 4.3%.

Powering ahead

I expect most readers have used a National Express (LSE: NEX) coach at some point in their lives. What you may not know is that the company’s international expansion means it also carries many bus and coach users in North America, Spain and Morocco, and rail users in Germany. In fact, over 80% of the group’s operating profit now comes from outside the UK.

City analysts see average annual earnings growth of over 5% for the next two years, with average annual dividend growth of 8%. Earnings expectations could be upgraded, as the company continues its strategy of winning new contracts and making strategic acquisitions, such as the recently announced acquisition of a majority stake in Silicon Valley’s premier employee shuttle company WeDriveU.

National Express has a prospective 4% initial yield for buyers of the shares at a current price of 410p.

Gold star

Gold miner Polymetal International (LSE: POLY) is forecast to deliver average annual earnings growth of near 9% for the next two years, with average annual dividend growth just into double figures. Rising production is expected from 2020, and with the company’s focus on operating performance and costs, the stage looks set, as my Foolish colleague Royston Wild recently wrote, for profits to keep rising well into the next decade.

Buyers of the stock at 805p today should bag an initial dividend yield of 5.2%.

As with many precious metals miners, there’s some geographical concentration and geopolitical risk in terms of where Polymetal’s assets are located: namely, Russia and Kazakhstan. Investors could mitigate this by going for a half-holding with another dividend-paying gold miner in a different part of the world, such as Egypt-based Centamin.

The post 3 FTSE 250 dividend stocks I’d buy in May appeared first on The Motley Fool UK.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Primary Health Properties. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Coming around?

Aside from that ISA cut-off date, there’s another great reason why I think you should buy into PZ Cussons (LSE: PZC) in the coming days: I believe that the household good manufacturer’s share price could skip higher when trading details are released on Thursday, April 18.

Regular readers will know about the rapid improvement in the Nigerian economy which I recently described, a key market for Cussons and the chief reason behind the firm’s profits problems of recent years. Signs of this strength in the FTSE 250 firm’s upcoming update could prove the spark for a much-needed recovery in investor appetite for this former dividend hero.

It may have put paid to its long-running progressive payout policy last year, but another 8.28p per share reward forecast for the 12 months to May 2019 still creates a chubby 4% yield. Besides, City analysts are expecting Cussons to return to dividend growth from fiscal 2020 amid predictions that annual profits will start increasing again from this point. 

Another gold-lined great

Polymetal International (LSE: POLY) is an income stock that could be very much ‘for the moment’ in turbulent times like these.

The gold digger’s share price continues to edge steadily higher, with recent strong financials giving it an extra dose of rocket fuel. Last week it said that revenues rose 4% in 2018 to $1.88bn, due primarily to a 9% rise in aggregated output to 1.56m ounces. Output of 1.55m ounces and 1.6m ounces are expected in 2019 and 2020 respectively, but given Polymetal’s recent record of beating projections, I think actual production could surprise to the upside again.

BIG dividend yields

A strong gold price has supported Polymetal over the past several months, and although bullion values have reversed back towards the $1,300 per ounce marker more recently, I think another surge in demand for the safe-haven asset could be just around the corner.

Aside from Brexit-related worries that have powered gold sales of late, there’s a variety of other issues keeping the yellow metal well bought and which could send prices soaring again. Signs of economic distress in China and Europe; the soon-to-be-released Robert Mueller report in the US that could potentially lead to impeachment of President Trump; a recent rise in global terrorism; souring trade talks between the US and China…

There’s plenty of reason, then, to expect the recent bull run in the gold market to continue, reasons why City analysts expect profits, and thus dividends, at Polymetal to keep on rising through to the end of 2020 at least. And this means that 57.5 US cents per share is predicted for this year alone, resulting in a fatty forward yield of 5%.

The post Calling ISA investors! 2 FTSE 250 dividend stocks I’d buy before the deadline appeared first on The Motley Fool UK.

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Royston Wild has no position in any of the shares mentioned. The Motley Fool UK owns shares of PZ Cussons. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

However, much has happened since February. Some of Hammerson’s major shareholders were as critical as me of the Intu deal, and the board backed out of it. At the same time, Hammerson itself received a takeover approach, pitched at 635p a share, from French shopping centres giant Klépierre, which it rejected. Finally, this week Hammerson issued a strategy update alongside its half-year results. Does any of this change my view of the stock?

Big discount to NAV

Hammerson’s shares have made a bit of a recovery since the turmoil earlier this year. However, at not much above 500p, they still trade at a big discount to the latest net asset value (NAV) of 776p. In addition to this marker of value, the company possesses another in the shape of a prospective 5.2% dividend yield.

The board this week announced a radical reshaping of strategy, focusing solely on “Flagship retail destinations and Premium Outlets.” It’s set a target of disposing of £1.1bn of assets by the end of 2019 and to completely exit the UK retail park sector (a portfolio of 15 units) in the medium term.

Challenged retail market

I see an elevated risk of Hammerson becoming a value trap for investors. Retail parks have delivered “sub-standard financial results” for the company in recent years and contracts for the sale of two of these announced earlier this week were at a discount of 10% to their book value. It may be the case that rather than the 500p share price rising towards the 776p NAV, the NAV falls towards the share price, due to asset values declining in a challenged retail market that’s suffering waves of administrations and Company Voluntary Arrangements.

Because of the NAV value-trap risk and my lack of confidence in Hammerson’s management, I continue to rate the stock a ‘sell’. I think not only was the idea of the Intu deal daft, but also that the 635p a share offer from Klépierre would have been a decent result for shareholders.

Super-cheap P/E

I’m convinced fellow FTSE 250 stock Polymetal International (LSE: POLY) represents a stronger proposition for investors. This Russia-focused gold and silver producer does come with some political risk, as with most precious metals miners. However, it’s a long established business in the territory and, at a share price of around 670p, I reckon the current-year forecast price-to-earnings (P/E) ratio of 9.6 and prospective dividend yield of 5.1% are far too generous.

Last month, the company announced the start of its new Kyzyl mine in Kazakhstan. Impressively, this was a full quarter ahead of schedule and came in 3% under budget. Looking ahead to 2019, analysts are expecting Polymetal to deliver over 30% earnings growth — bringing the P/E down to just 7.3 — and a similar uplift in the divided, taking the yield up to 6.8%. I believe there’s a strong chance of the share price rising to bring the P/E and yield to more normal levels. As such, I rate the stock a ‘buy’.

The post Are these 5% FTSE 250 dividend yields summer bargains or value traps? appeared first on The Motley Fool UK.

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• Growth stocks or dividend shares? You don’t have to choose!
• Here’s how to invest £5,000 in an ISA for a 7.41% dividend yield
• Down 98.5%! Is there any hope for penny share Synthomer?
• Here’s 1 passive income stock yielding 10%+ today!

G A Chester has no position in any of the shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The first, Egypt-focused Centamin (LSE: CEY), released its half-year results this morning and reiterated its previous guidance on production and costs for the full year. The shares are little changed from yesterday’s close of 167p, valuing the FTSE 250 firm at £1.9bn.

Reset for future growth

Centamin produced 235,828 ounces of gold in the first-half at an all-in sustaining cost of $871. With its open pit now into higher grade sectors and operations across the mine performing well, management said: “We look forward to a strong second half of the year and maintain our full-year guidance of 540,000 ounces at an all-in sustaining cost of $790 per ounce.”

Production will be lower and costs higher than in 2016 and with profit-sharing with the Egyptian Mineral Resources Authority also fully kicking-in this year, we can see 2017 as a year that resets the top- and bottom-line numbers as a benchmark for future growth. And that future growth makes the shares cheap, in my view.

Compelling valuation

Analysts are forecasting Centamin will post earnings per share (EPS) of 11 cents (8.3p at current exchange rates) this year, with a 27% increase to 14 cents (10.6p) next year. This gives price-to-earnings (P/E) ratios of 17 and 15.6 and a highly attractive price-to-earnings growth (PEG) ratio of 0.6.

At the Q1 stage, the company had said there was “potential in the coming quarters to deliver higher gold output and lower costs than our base case outlook.” This could have led to a beat of EPS forecasts and I’m a little disappointed the statement has been quietly dropped from today’s report. Nevertheless, I think the valuation, as is, remains compelling. Particularly as Centamin is debt-free and has cash, bullion on hand, gold sales receivables and available-for-sale financial assets of $333.6m (£253m or 22p a share).

There’s also a decent dividend in prospect. Analysts are forecasting 6 cents (4.55p), followed by 7 cents (5.3p) next year, giving a yield of 2.7%, rising to 3.2%.

Another gold prospect

Centamin’s FTSE 250 peer Polymetal International (LSE: POLY), whose main operating assets are located primarily in the Russian Federation, is another gold miner I think is cheap right now and where the potential rewards could be substantial.

Analysts are forecasting EPS of 105 cents (79.5p) this year, with a 17% increase to 123 cents (93.2p) next year. At a share price of 912p, this gives P/Es of 11.5 and 9.8 and the same attractive 0.6 PEG ratio as Centamin.

Unlike the Egypt operator, Polymetal has net debt of $1.33bn (£1.01bn or 234p a share), but it doesn’t look too stretched against a market cap of almost £4bn. Indeed, the board has signalled its confidence in the company’s financial position by bringing in a new dividend policy that increases the payout to 50% of earnings from 30% previously. Based on the EPS forecasts, this would imply generous dividend yields of 4.4% this year and 5.1% next year.

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G A Chester has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

With that in mind, here are two stocks which appear to offer the scope for further share price gains.

Improving outlook

The share price of gold producer Polymetal (LSE: POLY) has risen by 22% since the start of the year. Much of this has been due to the rising price of gold, which has become increasingly popular as uncertainty regarding the global growth outlook has increased. President Trump’s spending plans have also meant that the prospects for inflation are now more bullish than previously thought, which has made a natural store of wealth such as gold more attractive to investors.

As well as a rising gold price, Polymetal’s shares have been boosted by improving financial performance. Its production update released on Wednesday showed that it has increased gold equivalent production by 8% in the first quarter of the year. This was comprised of a rise in gold production of 18%, a fall in silver production of 15% and an increase in copper production of 88%.

Looking ahead, Polymetal is expected to record an increase in its earnings of 23% in the current year. It is due to follow this with growth of 14% next year. This puts it on a price-to-earnings growth (PEG) ratio of just 0.8, which indicates that now could be the perfect time to buy it for the long run.

Dirt-cheap valuation

While much of the Oil & Gas industry has underperformed the wider index in 2017, exploration and development company Serica Energy (LSE: SQZ) has recorded a share price gain of 116% since the turn of the year. Despite this, it continues to trade on a relatively enticing valuation. In the current year, the company’s bottom line is forecast to more than double. This puts it on a forward price-to-earnings (P/E) ratio of just 4.6, which indicates that there is a wide margin of safety on offer.

Looking ahead, the Oil & Gas industry may experience a turbulent period. While demand is likely to catch-up to supply in the near term, there is no guarantee of further cuts to production by OPEC. As such, the oil price may remain volatile and could even fall in the coming months. While this may lead to a difficult period for investors in Serica Energy and in the wider industry, in the long run the margin of safety on offer indicates that the upside potential is significant.

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Peter Stephens has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.