The soaring price of gold has become a profit amplifier, and Barrick Gold (B.US) still has plenty of room for further gains.

The analysis indicates that there are roughly 4 types of business models in the market. The first type of business is related to deposit and fund-raising and lending, which is the business model widely adopted by banks in the current financial system. Apart from the occasional financial crisis that seems to occur every century or so, these businesses are often stable, profitable, and defensive. The second business model is called "asset-based" business model. These companies invest in assets that can generate economic value, such as utilities, real estate, airlines, and communication infrastructure. Mobile signal towers, airplanes, pipelines, and office buildings can all generate stable income, and the task of these businesses is to provide financing for these assets at favorable rates while maintaining lower operating costs and returning profits to shareholders as much as possible. These are great companies, though the growth rate may be a bit "slow". Next, there are "standard" businesses - these companies produce products or services and charge a premium above costs. These companies encompass almost all types, from consumer goods sales and consulting services to tractors, software, and more. For these businesses, the key is to acquire customers and optimize delivery processes as much as possible. These businesses (especially those with recurring income) are more favored by investors because of their high predictability. Finally, there are businesses with higher risk - commodity leverage trading. Of course, this is not to say that commodity leverage businesses are not important; they are important because society is largely composed of materials and energy products extracted from underground by shareholders sacrificing resources. The problem with these businesses is their high dependence on commodity prices. For gold miners, oil drillers, and agricultural producers, their way of survival is to produce as much as possible and then sell it in the open market, hoping to make a profit after deducting costs. This business model is very difficult, and the operations of these businesses are almost unpredictable. However, analysts point out some unique opportunities among these "commodity leverage" companies - Barrick Mining Company (B.US). Barrick Mining is one of the world's top gold and copper producers, with mining operations around the world. Given the recent surge in gold prices, some may think that the stock has risen too much and should not be bought, but analysts believe that with the rise in gold prices, continued excellent operations, and persistent performance gaps, there is still a large room for the stock to rise. Fundamentals Barrick Mining is one of the world's largest mining companies with a current market capitalization of $81 billion. The company generates over $10 billion in revenue annually, mainly from mining gold and copper mines globally. When thinking about companies like Barrick Mining, the simplest way to understand is: draw a straight line, mark the company's maintenance costs, and then overlay the trend chart of gold and copper prices. Whenever the prices of gold and copper are higher than their maintenance costs, Barrick Mining can make a profit; but when prices fall below the company's costs, it will incur losses. Therefore, if Barrick Mining's fixed costs are relatively stable, including wages, equipment, mining concession fees, etc., even a small change in gold prices can lead to significant fluctuations in profitability. For example, if Barrick Mining's all-in gold mining costs are around $1,000 per ounce, an increase in gold prices from $1,100 per ounce to $1,300 per ounce would actually double the company's profitability. This is why Barrick Mining and other mining and energy companies are referred to as "commodity leverage" businesses - their profitability and stock prices are highly correlated with the basic commodities they produce. For example, Barrick Mining has always operated in a relatively conservative manner. As of the latest quarter, the company has a considerable number of mining assets globally, with cash reserves exceeding $5 billion. This cash reserve strategy is wise because it allows management to deal with fluctuations in the commodity markets. In the last quarter, Barrick Mining produced approximately 829,000 ounces of gold and 55,000 tons of copper, with integrated maintenance prices of $1,538 per ounce and $3.14 per pound, respectively: Similar to the situation with comprehensive maintenance costs of mining, the company's cost base has remained relatively stable compared to the same period last year. The gold mining costs have fluctuated within single-digit percentage range in the past 12 months. The copper mining operation costs fluctuate slightly more, but these variations are relatively small. In contrast, Barrick Mining's revenue has grown significantly in the past year - growing over 23%, thanks to the rise in gold and copper prices: More importantly, this significantly enhances Barrick Mining's profitability, with the company's gold business growing by 52% year-on-year and its copper business growing by 99%: With gold and copper prices continuing to diverge from the company's full mining costs, every rise in commodity prices directly affects Barrick's profitability. Another good news for the company is the positive outlook for gold this year. Even with Bitcoin taking some market share, central bank buyers, falling real interest rates, and strong technical momentum could potentially boost gold prices. Therefore, even if gold prices rise or remain stable, Barrick Mining is poised to have a profitable year. Analysts currently predict that from 2025 to the end of 2027, the company's earnings per share will grow by 80%, 48%, and 11% year-on-year. Due to its solid balance sheet and low financial leverage, higher prices have already and will continue to mean a bountiful harvest for Barrick Mining in the coming years. Valuation The intrinsic performance of mining stocks seems attractive, but if commodity prices fall, stock prices may be much higher than initially expected. However, with inflation and the devaluation of the dollar as a store of value, gold prices tend to rise. Therefore, it is expected that gold prices may continue to fluctuate within a stable or rising range, which allows me to understand the current stock price of Barrick. Currently, based on estimated values, Barrick Mining has a price-to-earnings ratio of 21 times: By 2026, with earnings per share growing by nearly 50% year-on-year, the price-to-earnings ratio is expected to drop to around 14 times. Finally, analysts predict that assuming a 11% year-on-year growth in earnings per share, Barrick Mining's price-to-earnings ratio in 2027 will be around 12.6 times. In short, the current price-to-earnings ratio is around 20 times, and it might drop significantly to around 10 times within the next 24 months. For investors, if these estimates become reality, it means one of two things: either the stock price remains the same and the valuation shrinks, or Barrick Mining's stock price rises to maintain its current valuation. Barrick Gold Corporation's stock price could become cheaper in the next few years or rise significantly. In this regard, its growth potential becomes more prominent. In terms of fair value, analysts estimate Barrick Mining's fair value for the next year to be around $71 per share: This assumption uses a sub-market price-to-earnings ratio of 20 times, combined with analysts' expectations for growth in the next two years. Given Barrick Mining's current valuation (forward PEG ratio of 0.45) seems exceptionally cheap compared to its growth prospects, this is a relatively conservative estimate. Barrick Mining's stock price is not only lower than the industry average price-to-earnings ratio by 65%, but the company itself also expects to achieve stronger growth, consolidating its position as a reasonably priced, high-leverage gold stock, and the company's stock price is expected to rise significantly in the coming years. Finally, for high-leverage stocks like mining companies, their stock prices often fluctuate more than the prices of their commodities. That is, if the gold price rises by 10%, the stock price of gold mining companies closely related to gold prices may rise by 30%. However, in the case of Barrick Mining, over the past five years, its stock price has actually lagged behind copper and gold prices: Therefore, it seems that Barrick Mining still has a lot of room for growth, which is part of a trend that the market has not fully realized. In conclusion, with rising or stable gold prices, strong performance, and relatively fair valuation, these factors together constitute strong reasons for analysts to strongly recommend buying Barrick Mining in the next 12 months. Risks Of course, investing in Barrick Mining also carries risks. As an investment that leverages commodities, investors in Barrick Mining are undoubtedly betting on the continued rise of gold prices. However, this is not always the case, and if prices fall, companies like Barrick are often unfairly punished by the market. If gold or copper prices fall slightly or sharply in 2026, Barrick Gold Corporation's stock price is also expected to fall. This situation occurred in mid-2022 when copper prices plummeted, and Barrick Mining's stock price followed suit. In addition to direct commodity price risks, Barrick also faces long-term execution risks related to production, new mine developments, and traditional operational challenges faced by being a top global gold producer. Jurisdictional challenges, especially in developing countries, still exist; political instability may push up gold prices, but it can also affect Barrick Mining's mining operations in various regions. Summary Overall, analysts believe that investing in Barrick Mining in the next 12 to 24 months is a low-cost, high-leverage way to participate in the stable or rising gold price environment. Compared to other companies in the same industry, the company's stock price seems very cheap, and it is expected that as the company continues to advance its strategies, the stock price will continue to rise.