Sandstorm Gold .(US:SAND) Seeking Alphaยท2024-08-22 20:56Core Viewpoint - The article argues that while gold has historically been viewed as a safe investment, it has underperformed compared to equities over long periods, making companies like Sandstorm Gold Ltd. (SAND) a more attractive investment option due to their royalty streams and potential for growth [3][4][20]. Company Overview - Sandstorm Gold is a 'Gold Streamer' that finances mining companies in exchange for royalty contracts, allowing it to benefit from gold price increases and production growth [5][6]. - The company has a diverse portfolio of royalty contracts, which include a mix of Net Smelter Return (NSR) and fixed cost contracts [6]. Financial Performance - Sandstorm Gold faced challenges during the COVID-19 pandemic, which impacted earnings despite rising gold prices [7]. - The company made significant acquisitions in 2022, which strengthened its portfolio but also increased debt and diluted shares by 50% [8][9]. - Recent financial progress includes a focus on debt reduction and a robust cash flow from operations, despite some temporary setbacks in net income [10][11]. Growth Potential - Sandstorm Gold expects to double its gold production over the next five years as key assets transition from development to production [12]. - The company has a strong position in low-cost, high-production assets, which is expected to enhance its growth potential [13]. Valuation - Sandstorm Gold is considered undervalued compared to its peers, with potential upside of 30-40% based on multiple normalization [15][16]. - The combination of production growth and rising gold prices could lead to a potential upside of 50-60% over the next 24 months [16][17]. Conclusion - Overall, Sandstorm Gold is viewed as a compelling investment opportunity for those looking to add gold exposure to their portfolios, with anticipated growth and a recharged balance sheet expected to drive investor interest [20].