Newmont Corp (NYSE:NEM): A Peter Lynch Screen Finds a Quality GARP Candidate

The investment philosophy created by Peter Lynch has long been a guide for investors looking to build wealth through a disciplined, long-term method. His strategy centers on finding companies that show lasting growth, trade at sensible prices, and keep sound financials. By steering clear of speculative timing and focusing on basic business quality, Lynch’s approach seeks to find stocks that can provide steady returns over many years. This structure is especially attractive for investors who prefer a growth at a reasonable price, or GARP, style, mixing parts of both growth and value investing.

A Strong Pick from the Lynch Screen

Our use of a Peter Lynch-based stock screen recently found Newmont Corp (NYSE:NEM) as an interesting candidate. As the world's top gold mining company, Newmont's business is both simple and necessary, running a worldwide group of mines. This matches a main Lynch belief: invest in what you know and comprehend. The company's work in stable regions and its output of a lasting asset like gold make its business model fairly easy to understand, fitting the "simple but clear" idea Lynch frequently favored.

Fitting the Lynch Investment Rules

The screen uses particular, number-based filters taken from Lynch's ideas, and Newmont Corp fits these main points:

• Lasting Earnings Growth: Lynch liked companies increasing earnings between 15% and 30% each year, as this speed is seen as maintainable. Newmont's earnings per share have increased at an average yearly rate of 21.58% over the last five years, putting it right inside this wanted band and showing a record of solid, but not extreme, increase.
• Sensible Price via PEG Ratio: A key part of the Lynch method is the Price/Earnings to Growth (PEG) ratio, which must be at or under 1.0. This measure makes sure an investor is not paying too much for a company's growth potential. Newmont's PEG ratio of 0.81 shows that its present share price is good compared to its past earnings growth, a positive signal for price-aware investors.
• Sound Financial Health: Lynch stressed the need for a firm balance sheet.
  • The company's Debt-to-Equity ratio of 0.23 is not just below the screen's limit of 0.6 but also matches Lynch's own liking for a ratio under 0.25, showing little dependence on debt funding.
  • A Current Ratio of 2.23 shows more than enough short-term cash to cover its bills, easily passing the needed minimum of 1.0.
• High Profitability: A Return on Equity (ROE) above 15% is needed to make sure the company is effectively creating profits from shareholder money. Newmont's ROE of 19.55% is well above this mark, showing good management skill and a high-grade business.

Basic Health Review

A closer look into Newmont's basics supports the screening outcome. The company's total basic rating of 7 out of 10 indicates a balanced investment profile. Its profitability is a notable feature, with very good margins and returns that place near the best in its field. Financially, Newmont is in fine health, with a good cash position and a workable debt level that raises no payment worries. While its price seems fair on a normal P/E basis, when growth is included through the PEG ratio, the stock seems more interesting. It should be mentioned that while past growth has been solid, analyst views for future earnings and sales growth are more conservative. For a full review, you can see the complete fundamental analysis report for NEM.

A Match for the GARP Investor

For the long-term GARP investor, Newmont Corp offers an interesting case. It is not a very fast growth story, but instead one of a high-grade, profitable business growing at a maintainable speed and offered at a sensible price. This is the core of what Peter Lynch looked for: a financially stable company with a clear business model, shown growth, and a price that does not need too much future success. The company's global size and focus on a lasting asset like gold give a degree of operational steadiness that long-term investors should value.

The Peter Lynch screen is a useful beginning step for finding such chances. To see the present list of companies that meet this strict set of rules, you can use the Peter Lynch Strategy stock screener.

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Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer or solicitation to buy or sell any securities. The opinions expressed are based on analysis of publicly available data and do not guarantee future performance. All investments involve risk, including the possible loss of principal. You should conduct your own research and consult with a qualified financial advisor before making any investment decisions.