If you are wanting exposure to the sky high gold price, then Capricorn Metals Ltd (ASX: CMM) shares could be the way to do it.
That's the view of analysts at Goldman Sachs, which have just upgraded this ASX 200 gold stock.
What is the broker saying about this ASX 200 gold stock?
Firstly, let's look at the industry.
Goldman Sachs notes that it is feeling positive about gold and feels that this side of the market can continue to outperform.
Commenting on the industry, the broker said:
With gold prices continuing a record run through US$3,000/oz, and clearing A$5,000/oz, Australian and global gold equities outperformed the commodity in 1Q25, up ~30%/40% respectively (gold +19%). This continued from the latter part of CY24, where gold price improvements began to outpace cash costs/AISC increases, which had previously kept pace leaving sector margins flat from CY20 to mid-CY24 driving underperformance against the commodity.
We expect this gold equities cycle to continue, with stocks well positioned to continue to outperform the commodity through 2025 supported by two-pronged margin expansion, with rising gold prices and moderating unit cost pressures (further supported by production growth), where our sector cost benchmarking work implies moderating nominal cost increases, with this affirmed by our recent Perth trip seeing >25 corporates (mostly gold) with labour cost inflation seen at ~2-3%.
Why Capricorn?
According to the note, the broker upgraded this ASX 200 gold stock due to its increasingly compelling projects economics and its relative valuation versus peers.
Commenting on its upgrade, Goldman said:
With increasingly compelling growth projects at Karlawinda (expansion) and Mt. Gibson (one of few greenfield projects in the sector), both with emerging underground optionality (not in GSe base case), and a strong funding position to execute, we upgrade CMM to Buy.
The note reveals that Goldman has put a buy rating and $9.90 price target on the company's shares. Based on its current share price of $8.31, this implies potential upside of 19% for investors over the next 12 months.
Speaking about its valuation, Goldman adds:
: On our LT gold price of US$2,850/oz, CMM is trading at ~0.85x NAV (~0.65x at spot) or pricing in US$2,540/oz (peer average ~0.9x NAV & ~US$2,640/oz). While timing uncertainty on Mt. Gibson approvals have previously kept us from getting more positive, we see the project moving toward final state assessment following submission of the Public Environment Report (PER) in late CY24.
