This Top Basic Materials Stock is a #1 (Strong Buy): Why It Should Be on Your Radar

Newmont Corporation (NEM) was added to the Zacks Rank #1 (Strong Buy) list on November 25, 2025 after seven analysts raised fiscal 2025 earnings estimates in the past 60 days and the Zacks consensus estimate rose $0.52 to $5.96. The company reported sizable fundamentals: 134.1 million ounces of gold mineral reserves as of Dec. 31, 2024 and attributable 2024 production of roughly 6.8 million ounces; Zacks cites a 41.6% average earnings surprise and forecasts 71.3% earnings growth and 14.1% sales growth for the current fiscal year. NEM's shares have outperformed recently (up 10.1% over the past four weeks versus a -1.2% move in the S&P 500), suggesting positive momentum and potential increased institutional interest following upward estimate revisions.

Analysis

Market structure: NEM’s upgraded earnings trajectory and recent outperformance suggest reallocations into higher-quality gold producers; direct beneficiaries include large-cap producers (NEM, GOLD) and service contractors, while high-cost juniors and gold-linked debtors may be pressured if capital chases majors. Momentum-driven flows can compress spreads versus peers over 1–3 months and lift implied vols in miner options short-term, while bullion moves remain the primary price driver over 6–12 months.

Risk assessment: Key tail risks are a >15% drop in spot gold within 60 days, jurisdictional tax/royalty shocks (e.g., Peru/Mali) or a major operational outage that can remove ~5–10% of NEM’s annual output; these would cut EPS materially. Near-term (days–weeks) reactions will trade on estimate revisions and flows; medium-term (3–12 months) on actual cost/AISC reporting; long-term (years) on reserve replacement and capex execution.

Trade implications: Favor concentrated, tactical exposure to NEM with defined stops and use relative value to hedge equity risk — expect 20–35% upside potential if gold stays >$1,900/oz and guidance holds. Option overlays (12-month LEAPs or 6-month call spreads) are efficient to express directional view while capping premium; avoid outright long miners ETF exposure without pair-hedge versus Barrick (GOLD) or GDX.

Contrarian angles: Consensus may be pricing multi-year earnings power that depends on sustained high gold and unchanged AISC — a risk if costs inflect or reserve write-downs occur. Historical parallels (2016–2018 miner rallies) show rapid re-rating then mean reversion when capex or cost issues surfaced; overcrowding can make pullbacks violent — treat positions as event-driven, not permanent buys.

Key Decisions for Investors

• Establish a 2–3% long position in Newmont (NEM) on up to a 5% pullback from current levels or at market if momentum persists; set a 12% hard stop and a 25–35% price target over 12 months (assume gold >$1,900/oz).
• Implement a relative-value pair: long NEM 2% vs short Barrick (GOLD) 2% — target a 15–25% tightening of the NEM/GOLD spread over 6–12 months; exit or flip if the spread widens >10% from entry.
• Buy 12-month ATM LEAP calls on NEM sized to 1% portfolio notional (target delta ~0.50–0.60); if implied volatility is >historical 90-day vol +3%, prefer a 6-month call spread (buy ATM, sell 25% OTM) to cap cost, close on 50% gain or 50% premium loss.
• Risk triggers: reduce NEM exposure by 75% if (a) spot gold falls >15% within 60 days, or (b) NEM issues FY26 guidance cut or AISC increases >10% vs current guidance — treat these as automatic deleveraging signals within 48 hours.