At time of writing, the share price of Regis Resources Ltd [ASX:RRL] is up .88% on a day when the broader market was up, with the ASX 200 [XJO] posting a small .54% gain.
The Regis Resources share price is coming off a low of $2.90 on 16 March, and is now up over 50% in the last month and half, trading at $4.56:
Today we look at what’s been happening with Regis Resources with one eye on macroeconomic developments. Here’s two thoughts…
Thought #1: Regis Resources share price is lagging its peers but pays a dividend
The RRL share price hit a peak in July, but has shifted sideways and down as the gold price moved up.
Looking at its mid-tier peers, you can see it is down in the last 12 months with its competitors sporting significant gains, with the exception of St Barbara Ltd [ASX:SBM]:
The chart is telling us that a short-term pullback could be on the cards. It’s up more than 50% since the low and an RSI reading heading towards ‘overbought’ territory.
That being said, as of their most recent investor presentation from February, RRL had cash and gold on hand of $169 million and no debt.
This goes with a current dividend yield of 3.8%.
Dividends are relatively rare in the ASX gold stock world, and for now RRL’s dividend out strips bigger companies like Northern Star Resources Ltd [ASX:NST] and Newcrest Mining Ltd [ASX:NCM].
And you can see courtesy of Market Screener, that it’s seen consistent Earnings Per Share (EPS) revisions since September:
Source: Market Screener
As a result, I think Regis Resources could beat a short-term pullback and continue on a run in the medium term, should the gold price continue to react positively to a growing set of dangerous policy settings emanating from central banks around the world.
Thought #2: The macroeconomic outlook for Regis Resources hinges on where its operations are
With mines exclusively in Australia, and the country increasingly looking to roll back restrictions after a relatively successful response, Regis Resources could be well placed compared to companies with overseas operations.
Given the importance of mining to Australia, it is conceivable that this industry will be front of the queue to have restrictions on worker movement removed.
Were this to happen, this should flow through to Regis Resources’ earnings and it’s worth noting that the company has not withdrawn guidance so far.
We will learn more about how the coronavirus has impacted their operations on Wednesday, 29 April, when they release their March 2020 quarterly.
The five things happening with the big banks and monetary policy highlighted here, should also come into focus in the coming weeks.
Gold isn’t done yet, is my feeling.
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