As gold breaks out to new all-time highs and targets $3,000 to the upside, Newmont Corporation (NEM) has emerged as a compelling opportunity in the mining sector, driven by a combination of strong performance and solid fundamentals. NEM’s recent breakout above its trading range indicates a shift in sentiment, making it an attractive choice to capture a leveraged move in gold. Gold recently broke out above its $2,800 double top level, which now targets $3,000 to the upside and provides a tailwind for mining stocks. And if we look at a chart of NEM, it declined by nearly 40% over the past 3 months, but recently bottomed and started to breakout above a major resistance level at $44. This breakout was coupled with NEM outperforming the S & P 500, which suggests potential accumulation by institutions. This chart pattern, coupled with above average volume and outperformance suggests a potential move to our $57 upside target. From a valuation perspective, NEM trades at a discount to its industry median, despite superior growth and profitability metrics. Combined with a recovery in net margins back to 20% over the last quarter, it presents a substantial upside potential for investors. Forward PE Ratio: 11.4x vs. Industry Median 12.4x Expected EPS Growth: 38% vs. Industry Median 22% Expected Revenue Growth: 17% vs. Industry Median 7% Net Margins: 20% vs. Industry Median 11.17% The trade The implied volatility of NEM options is currently extremely elevated. To leverage this bullish outlook and the high prices for options, I suggest selling a put vertical spread using the Mar 28, 2025 $45/42Put Vertical @ $1.17 Credit. This put vertical strategy provides a way to capture the higher implied volatility of NEM options with a bullish outlook and limited risk. This entails: Selling the March 28, 2025 $45 put @ $2.21 Buying the March 28, 2025 $42 put @ $1.04 View this Trade with Updated Prices at OptionsPlay The maximum reward is $117 per contract if NEM is above $45 at expiration. The maximum risk is $183 if NEM falls below $42 at expiration. The breakeven point for this trade is $43.83 With gold at all-time highs, mining stocks with high exposure to the precious metal such as NEM will see a benefit to their bottom line over the next quarter. As NEM breaks out higher, NEM represents one of the best value plays in this industry and options allows us to harness the excess volatility of the stock with limited risk. DISCLOSURES: (No disclosures) All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
A leveraged way to play the gold breakout