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JimVanMeerten (62.32)

3 Great reasons to buy a gold producer

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August 19, 2010 – Comments (0) | RELATED TICKERS: GSS

I'm adding Golden Star Resources (GSS) to the Barchart Van Meerten Speculative portfolio because the 7 Wall Street brokerages that follow the stock predict double digit increases in both sales and earnings going out for at least 5 years.

GSS is an un-hedged gold producer that owns the Wassa gold project in Ghana and controls a number of gold exploration properties in West Africa. The Company is well funded and has strong, operationally focused management experienced in West Africa. The Company has become a producing gold company by consolidating a long-lived production base at Bogoso/Prestea in Ghana. Going forward, the Company plans tol continue to focus on growing its gold business.

Technically this stock is on the move. Barchart technical indicators have 12 of 13 buy signals for an overall 96% buy signal, The stock has hit new highs in 16 of the last 20 sessions including all of the last 5. Along the way it had a 17.35% price appreciation in the last month and trades around 4.71 well above its 50 day moving average of 4.23.

Seven Wall Street brokerages are following this stock and have a consensus estimate that sales will increase 16.10% this year and 11.40% next year. Fantastic earnings projections of increases of 142.90% this year, 58.80% next year and continue at a 5 year annual compounded growth rate of 10.00%.

The general investing public as measured on Motley Fool has noticed these projections and the CAPS members vote 720 to 54 that the stock will beat the market with the more experienced All Stars in agreement 202 to 15. Fool notes that all 3 articles recently written about the company have been positive.

This stock meets my criteria for addition to my model portfolio as a speculative issue because:

1 - The stock is having upward price momentum in more than 50% of the recent trading sessions 2 2 - Wall Street brokerage fundamental analysts predict double digit increases in sales and earnings 3 - There is a wide and positive investor sentiment

Jim Van Meerten is an investor who writes on investing here and on Barchart Portfolio Blogs. Please leave a comment below or email JimVanMeerten@gmail.com.

Disclosure: No positions in the stock mentioned at the time of publication

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