Gold Miners Remain Undervalued Despite Rally
Written by Emily J. Thompson, Senior Investment Analyst
Updated: 1h ago
0mins
Should l Buy WMT?
Source: Benzinga
- Gold Mining Undervalued: Despite a 155% rally over the past year, gold mining stocks, as tracked by the VanEck Gold Miners ETF, remain undervalued, with market metrics indicating significant upside potential, reflecting gold prices between $2,000 and $2,500 per ounce, while physical gold trades above $5,000 per ounce.
- Small Market Capitalization: The total market capitalization of global gold miners stands at just $1 trillion, lower than Walmart's $1.1 trillion, indicating the sector's size is far below historical levels, with gold miners accounting for only 1% of global equities, down from over 10% in previous decades.
- Underinvestment Issues: Capital expenditures in the gold mining sector are at all-time lows relative to gold prices, and large mining companies have not yet begun to aggressively reinvest in new reserves, with senior miners trading at just 0.75x net asset value (NAV) and junior miners at 0.51x, significantly below historical norms.
- Optimistic Future Outlook: Bank of America analysts express bullish sentiment for gold miners in 2026, citing multiple tailwinds such as geopolitical instability and a weakening U.S. dollar, with gold potentially breaking above $6,000 per ounce, which could further drive mining stock valuations, projecting a possible 10x growth in the next 3 to 4 years.
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Analyst Views on WMT
Wall Street analysts forecast WMT stock price to fall over the next 12 months. According to Wall Street analysts, the average 1-year price target for WMT is 125.75 USD with a low forecast of 119.00 USD and a high forecast of 136.00 USD. However, analyst price targets are subjective and often lag stock prices, so investors should focus on the objective reasons behind analyst rating changes, which better reflect the company's fundamentals.
26 Analyst Rating
25 Buy
1 Hold
0 Sell
Strong Buy
Current: 131.180
Low
119.00
Averages
125.75
High
136.00
Current: 131.180
Low
119.00
Averages
125.75
High
136.00
About WMT
Walmart Inc. is a technology-powered omnichannel retailer. The Company is engaged in the operation of retail and wholesale stores and clubs, as well as eCommerce Websites and mobile applications, located throughout the United States (U.S.), Africa, Canada, Central America, Chile, China, India and Mexico. It operates in three reportable segments: Walmart U.S., Walmart International and Sam's Club U.S. The Walmart U.S. segment includes the Company's mass merchandising concept in the U.S., as well as eCommerce, which includes omni-channel initiatives and certain other business offerings such as advertising services. The Walmart International segment consists of the Company's operations outside of the U.S. through its subsidiaries, as well as eCommerce and omni-channel initiatives. The Sam's Club U.S. segment includes the warehouse membership clubs in the U.S., as well as samsclub.com and omni-channel initiatives.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Increased Store Payroll: The company intends to allocate more payroll to stores, particularly by increasing hours for frontline employees and implementing new guest experience training, addressing customer feedback regarding out-of-stock items and long checkout lines to boost satisfaction.
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- Small Market Capitalization: The total market capitalization of global gold miners stands at just $1 trillion, lower than Walmart's $1.1 trillion, indicating the sector's size is far below historical levels, with gold miners accounting for only 1% of global equities, down from over 10% in previous decades.
- Underinvestment Issues: Capital expenditures in the gold mining sector are at all-time lows relative to gold prices, and large mining companies have not yet begun to aggressively reinvest in new reserves, with senior miners trading at just 0.75x net asset value (NAV) and junior miners at 0.51x, significantly below historical norms.
- Optimistic Future Outlook: Bank of America analysts express bullish sentiment for gold miners in 2026, citing multiple tailwinds such as geopolitical instability and a weakening U.S. dollar, with gold potentially breaking above $6,000 per ounce, which could further drive mining stock valuations, projecting a possible 10x growth in the next 3 to 4 years.
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- Increased Store Payroll: The company intends to allocate more payroll to stores, particularly by increasing hours for frontline employees and implementing new guest experience training, addressing customer feedback regarding out-of-stock items and long checkout lines to boost satisfaction.
- Strategic Transformation: New CEO Fiddelke emphasizes restoring Target's fashion image and consistent customer experience as top priorities, planning to simplify operational processes to manage the growing complexity of store management while ensuring both customer service and online order fulfillment needs are met.
- Future Outlook: Target is set to share its turnaround strategy and holiday quarter results during an investor event on March 3, expected to further elaborate on how it plans to tackle intensified competition and evolving customer demands to achieve sales growth.
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- Small Market Capitalization: The total market capitalization of global gold miners stands at just $1 trillion, lower than Walmart's $1.1 trillion, indicating the sector's size is far below historical levels, with gold miners accounting for only 1% of global equities, down from over 10% in previous decades.
- Underinvestment Issues: Capital expenditures in the gold mining sector are at all-time lows relative to gold prices, and large mining companies have not yet begun to aggressively reinvest in new reserves, with senior miners trading at just 0.75x net asset value (NAV) and junior miners at 0.51x, significantly below historical norms.
- Optimistic Future Outlook: Bank of America analysts express bullish sentiment for gold miners in 2026, citing multiple tailwinds such as geopolitical instability and a weakening U.S. dollar, with gold potentially breaking above $6,000 per ounce, which could further drive mining stock valuations, projecting a possible 10x growth in the next 3 to 4 years.
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- Job Cuts and Increases: Target plans to eliminate about 500 roles, including 100 at the store district level and 400 in supply chain positions, while simultaneously increasing store employee hours to address customer complaints regarding service quality, aiming to enhance customer experience and restore sales growth.
- New CEO's Strategic Shift: Following the appointment of CEO Michael Fiddelke on February 1, the company is implementing organizational changes by reducing the number of store districts and increasing frontline employee hours, indicating a commitment to improving customer service and revitalizing the brand image.
- Intensifying Market Competition: With increasing pressure from competitors like Walmart and a shift in consumer spending towards necessities, Target's sales have remained flat for the past four years, necessitating a focus on service quality to attract customers back to stores.
- Future Outlook and Investor Engagement: Target is expected to share more details about its turnaround strategy during an investor event on March 3, where it will also disclose holiday-quarter results and full-year forecasts, further outlining its plans for restoring growth.
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- Walmart's AI Strategy: Walmart is not investing heavily in artificial intelligence but is prepared to utilize AI tools developed by major tech companies.
- Collaboration with Big Tech: The retail giant is waiting to implement AI advancements that come from the significant research and development efforts of Big Tech firms.
See More
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- Market Shift: There is a significant rotation from software stocks to safer investments like consumer staples.
- Investor Sentiment: Investors are concerned that advancements in AI, such as ChatGPT, may negatively impact service-oriented businesses while benefiting manufacturers of household products.
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- Milestone Achievement: Walmart's market cap has surged by 28% over the past year, reaching $1 trillion, making it one of the few non-tech stocks in this exclusive club, yet this high valuation raises concerns among investors about potential overvaluation.
- Valuation Comparison: Currently, Walmart's P/E ratio stands at 45, significantly higher than its five-year average of 35 and the S&P 500's average of 25, indicating that the market has high expectations for its future growth, which is only at 6%, making such a premium hard to justify.
- Limited Growth Potential: Despite Walmart's expansion in e-commerce and the acquisition of Vizio providing new opportunities for its advertising business, its growth rate remains in the single digits, prompting investors to carefully assess the sustainability of its high valuation.
- Investment Advice: Given Walmart's elevated valuation, analysts recommend avoiding the stock, suggesting that there are other retail investment options available that may offer better long-term returns, despite Walmart's strong business fundamentals.
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