'If It's Gold, It's Going Higher' — But Cramer Isn't Backing New Gold

Jim Cramer highlighted Globalstar as "finally breaking out" after the company reported better-than-expected Q2 earnings, with EPS of $0.13 significantly beating estimates of a -$0.05 loss and sales of $67.148 million exceeding projections, leading to a 3% stock increase. While Cramer expressed a bullish sentiment for gold, he favored Agnico Eagle Mines over New Gold, despite New Gold's Q2 EPS beat ($0.11 vs. $0.09 est.), as its sales of $308.4 million missed estimates, resulting in a 4.6% share decline.

Analysis

Globalstar, Inc. (GSAT) is exhibiting strong fundamental momentum, underscored by a significant second-quarter earnings beat where it reported EPS of $0.13 against a consensus estimate of a $0.05 loss. This bottom-line outperformance was complemented by a top-line beat, with quarterly sales of $67.148 million exceeding the estimated $63.138 million, fueling analyst commentary of a "breakout" and a subsequent 3% rise in its share price. In the commodities space, a bullish sentiment for gold was noted, but performance among miners is diverging based on operational execution. New Gold Inc. (NGD) illustrates this divergence; despite beating Q2 EPS estimates by reporting $0.11 versus a $0.09 consensus, the company missed revenue expectations with $308.4 million in sales against a $323.7 million forecast. This revenue miss appears to have outweighed the earnings beat in investors' eyes, contributing to a 4.6% decline in its stock. This backdrop supports a preference for other names in the sector, such as Agnico Eagle Mines (AEM), which was favored over New Gold despite its own shares declining by a modest 0.9%.

Key Decisions for Investors

• Investors may consider Globalstar's significant beat on both earnings per share and revenue as a strong bullish signal, supporting the view that its recent 3% stock gain is fundamentally justified.
• The negative market reaction to New Gold's revenue miss, despite an earnings beat, suggests investors should prioritize top-line growth and be cautious, as the stock underperformed even amid general bullishness for the underlying commodity.
• For those seeking gold exposure, the commentary suggests a selective approach is warranted; it may be prudent to favor perceived best-in-class operators like Agnico Eagle Mines over names with mixed operational results like New Gold.