Newmont Corp. (NYSE:NEM) Stands Out as a Peter Lynch-Style GARP Investment

For investors looking for a systematic, long-term way to build wealth, few strategies are as respected as Peter Lynch's method. The famous manager of the Fidelity Magellan Fund supported putting money into familiar companies, concentrating on businesses that are easy to understand, have lasting growth, and fair prices. His system does not follow the latest fads but finds good companies that are increasing earnings at a consistent pace without getting too expensive. It is a classic Growth at a Reasonable Price (GARP) method, mixing parts of growth and value investing to locate lasting opportunities.

A recent filter using Lynch's main conditions identified Newmont Corp. (NYSE:NEM) as a possible choice. As the top gold mining company globally, Newmont's operation is simple: it searches for and produces gold, plus other metals such as copper and silver. While the gold price causes swings, the company's basic activities, managing mines, controlling costs, and creating cash flow, are clear and can be evaluated, fitting Lynch's rule of investing in what you can grasp.

Checking Newmont With Lynch's Main Conditions

Peter Lynch's filter focuses on lasting growth, sound finances, earnings strength, and good value. Here is how Newmont compares on the main points:

• Lasting Earnings Growth: Lynch wanted companies with a 5-year earnings per share (EPS) growth between 15% and 30, strong but not unrealistically high. Newmont's EPS has increased at an average yearly rate of 21.6% over the last five years, putting it directly in this target range. This shows a clear ability to grow profits over a long time.
• Fair Valuation (PEG Ratio): To prevent paying too much for growth, Lynch used the Price/Earnings to Growth (PEG) ratio, aiming for a value of 1 or lower. A PEG under 1 implies the market might not completely account for the company's growth path. Newmont's PEG ratio, using its past five-year growth, is about 0.72, pointing to a possibly good price compared to its historical earnings increase.
• High Earnings Strength (ROE): Return on Equity (ROE) shows how well a company creates profits from shareholder money. Lynch wanted an ROE above 15%. Newmont's ROE of 21.6% is well above this level, showing strong earnings ability and good use of investor funds.
• Careful Financial Health (Debt/Equity): A solid balance sheet is key for handling economic changes. Lynch liked companies supported more by equity than debt, often seeking a Debt/Equity ratio below 0.25. Newmont's ratio of 0.17 shows a very careful financial setup with little borrowing, lowering risk for long-term owners.
• Good Liquidity (Current Ratio): Making sure a company can pay its short-term bills is a basic test of financial soundness. The filter needs a Current Ratio of at least 1. Newmont's ratio of 2.04 shows more than enough liquidity, with short-term assets easily exceeding short-term debts.

A Broad Look at Fundamental Factors

A wider view of Newmont's fundamental standing supports the image from the Lynch filter. The company gets a high total fundamental score of 7 out of 10, with special high marks in earnings strength and financial health.

Its margins are strong, with profit and operating margins placed in the highest group of the metals and mining sector. While revenue and earnings growth are predicted to slow from recent peaks, analysts still forecast positive EPS growth ahead. On value, Newmont's P/E and forward P/E ratios seem fair, particularly when measured against both industry competitors and the wider S&P 500. For a complete look at these numbers, you can see the full fundamental analysis report for NEM.

Is Newmont a Lynch-Method Investment?

For the GARP investor applying Peter Lynch's system, Newmont Corp. makes a strong argument. It works in a basic, clear industry and meets the number-based checks for lasting historical growth, high earnings strength, outstanding financial condition, and a fair price. The low PEG ratio is a key point, implying the market may not completely see the company's earnings ability compared to its growth.

It is key to remember that Lynch's method requires detailed non-number research beyond a filter. Investors would need to evaluate the long-term view for gold, Newmont's operational effectiveness, and its future mining projects. Still, based on the measurable standards Lynch promoted, Newmont's characteristics deserve more study for a long-term, varied portfolio.

Interested in finding other companies that match this systematic method? You can use the filter yourself and view the newest outcomes by going to the Peter Lynch Strategy stock screener.

Disclaimer: This article is for informational purposes only and does not constitute financial advice, a recommendation, or an offer to buy or sell any securities. The analysis is based on data and a specific investment strategy framework; investors should conduct their own thorough research and consider their individual financial circumstances before making any investment decisions.