I recently explained why imminent trading updates could propel income heroes TBC Bank and Persimmon and their share prices to the stars.
Polymetal International (LSE: POLY), by contrast, isn’t slated to provide any financials in November. It’s already updated the market in recent sessions in a move which provided fuel for its share price to power to fresh tops above £12.70. But I reckon the gold giant can still expect to soar even higher this month.
To recap, the Russia-based mining giant declared in mid-October that, thanks to a raft of production improvements at its flagship Kyzyl mine in the south of the country, total output for the third quarter rose 7%. Bounding production helped it to capitalise on strong gold prices and, as a consequence, group revenues soared 43% from the same quarter in 2018.
Gold prices have failed to make significant progress after striking six-year highs, above $1,540 per ounce, in early September. They’ve remained pretty rangey either side of $1,500 in the weeks since then as investors wait for the next significant catalyst. And I reckon a cause for a fresh charge higher could be just around the corner.
Price drivers
So what can investors expect in November? Well it’s likely, following fresh interest rate cuts from the Federal Reserve this week, that we could see similar action from other central banks across the world very soon. Bank stimulus has already boosted gold prices significantly in 2019 and the prospect of more action, in turn raising inflation and boosting demand for non-fiat currencies like bullion, this month and in 2020 appears a mere formality.
There’s plenty of geopolitical tension to propel yellow metal prices — and with it the share prices of the likes of Polymetal — still higher too. Bloomberg reported this week that Chinese lawmakers are pessimistic over inking a trade deal with the US on account of President Trump’s “impulsive nature” and the possibility he could withdraw from any accord at short notice.
There’s also the little matter of more political upheaval in the UK that could drive gold higher. Uncertainty over Brexit has long been a major driver of gold buying in recent months. Fears over what a Labour government, under Jeremy Corbyn, would mean for British business could prompt buying of the safe-haven assets should the polls begin to close approaching the December 12 election date.
Ripping growth, giant dividends
City analysts certainly believe gold will keep rising over the medium term and they’re expecting Polymetal, helped by those efforts, to boost production to record some terrific profits growth in the medium term.
Bottom-line rises of 16% and 27% are predicted for 2019 and 2020, respectively, figures that give rise to expectations of more dividend growth as well, and thus chunky yields of 3.7% and 4.6% for these years.
And with development activities at Polymetal’s Nezhda and the POX-2 projects coming along nicely, it’s possible both profits and shareholder payouts will keep booming beyond this period. Despite recent share price gains, the mining giant trades on a forward P/E ratio of 14 times and, in my opinion, this makes it too cheap to miss.