Why Goldcorp Stock (NYSE: GG) Is a Buy Today

The last four years have been difficult for the gold mining industry. Rising costs coupled with weaker revenue have cut profits, pushing some into bankruptcy.

But Goldcorp Inc. (NYSE: GG) has managed to survive and rise above the rest, avoiding the pitfalls of its competitors.

This means Goldcorp stock is well-positioned to get a nice boost once gold prices move higher again.

Take a look...

The Bullish Case for Goldcorp Stock (NYSE: GG)

Goldcorp is a precious metals miner with operations spanning North and South America. Its operations cover all facets of mining, ranging from exploration all the way to acquisition, extraction, and operation of mines.

One of the reasons Goldcorp stock looks good today is the company's healthy balance sheet.

You see, extremely high leverage has caused many gold miners, some with debt levels beyond 50% of their market cap, to seek bankruptcy protection in the past year. This has wiped out shareholders in the process.

goldcorp stock
(2) Courtesy of a May 2015 Goldcorp presentation. Amounts as reported in company financials as of March 31, 2015. (3) Go here for non-GAAP disclosure.

But Goldcorp's net debt currently represents only about 24% of its market cap.

Rather than load up on debt, Goldcorp focused instead on streamlining and optimizing operations by boosting gold production, limiting silver output, and trimming costs. And it's worked.

Goldcorp boasts some of the lowest all-in production costs among mining companies. In Q1 2015, all-in sustaining costs (AISC) amounted to $885 per ounce.

What's more, the company's AISC is set to fall even more, thanks to two development projects, one at Eleonore in Canada and the other at Cerro Negro in Argentina. Both of these have low production cost profiles, which could help Goldcorp lower its AISC further to just $750 over the next 12 months.

Goldcorp's production has grown steadily over the years, from 2.4 million ounces in 2012 to a projected 3.3 to 3.6 million ounces this year.

Here's how it's achieved that growth...

Goldcorp has four producing mines in Canada, plus one in development. It has two mines in Mexico, including its largest-producing project, the Penasquito Mine, forecast to provide a massive 720,000 ounces this year alone.

gold prices
(1) Courtesy of a May 2015 Goldcorp presentation material. Based on 2015 guidance as per a Jan. 12, 2015, press release and Wharf divestiture on Feb. 20, 2015.

Goldcorp also has operations in Guatemala, the Dominican Republic, and Argentina.

With proven and probable mineral reserves of 49,580,000 gold ounces, Goldcorp has plenty of inventory to keep producing for a long time to come.

But that hasn't stopped the company from making strategic acquisitions that are accretive to its business...

Deal Making Will Pay Off for Goldcorp Stock Investors

In March, Goldcorp completed its acquisition of Probe Mines. The target was its main asset, the 100% owned Borden Gold project in Ontario located just 160 km west of Goldcorp's own Porcupine mine.

Borden boasts some 2 million ounces of relatively high-grade gold in the indicated and inferred categories and is considered to contain still more gold beyond these ounces.

Probe was acquired by issuing Goldcorp shares, so the company only spent $15 million in cash on the deal.

Meanwhile, Goldcorp has not hesitated to unload assets that aren't a proper fit with their business plan.

[epom key="ddec3ef33420ef7c9964a4695c349764" redirect="" sourceid="" imported="false"]In April Goldcorp agreed to sell its 40% interest in the South Arturo Mine Project, located in Nevada, for proceeds of $20 million cash. In February, GG sold its 100% interest in the Wharf mine in South Dakota for $105 million in cash.

The Bottom Line: When it comes to senior gold mines, Goldcorp is one of the highest-quality names. Its combination of strong growth, low cost production, low debt, growth through acquisitions, and organic development in stable jurisdictions make for a best-in-class gold mining company.

Now's the time to add Goldcorp stock to your portfolio, before the gold price starts climbing again. Goldcorp's profits will soar, and along with them its share price.

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