Despite some more worrisome price action throughout the week, the three leading indexes were able to eke out gains last week. For the week, the S&P 500 gained 0.5%, the Dow rallied 1.2% and the Nasdaq advanced by 0.2%.
The Stock – AngloGold Ashanti (AU)
The ongoing escalation of a potential trade war between the U.S. and, well, most everyone else, is keeping investors playing defense, which is one of the key reasons behind gold’s latest surge to new highs. Near a record $3,000 an ounce, the precious metal is in heavy demand from individual and institutional investors, as well as from several of the world’s central banks.
AngloGold is a South Africa-based company that’s the world’s sixth-largest gold miner by output and the owner of a high-quality portfolio of gold, silver and copper mining assets across South America, Africa and Australia. In late 2024, AngloGold acquired from Centamin plc a 50% interest in one of the world’s largest gold mines, the Sukari mine in Egypt, which has provided AngloGold with what it calls a “step-change” in its gold production profile. (The acquisition also solidified AngloGold’s move away from the challenges and high costs associated with mining in South Africa, as the firm sold the last of its mines there in 2020.) Specifically, the Sukari mine is expected to boost the company’s annual gold production to over three million ounces—up 450,000 ounces from prior levels—and the gold mined at Sukari is at a considerably lower all-in sustaining cost (AISC, a key metric) than AngloGold’s overall costs of recent years ($1,200 an ounce versus $1,440), which should boost what was already a great free cash flow (FCF) profile, with that metric totaling nearly $1 billion (of which Sukari contributed over $60 million, with a full year’s contribution coming in 2025). The extraordinary improvement in that metric is a reason why a major investment bank upgraded the shares after the Centamin acquisition, which it said offers AngloGold a “logical combination” for further FCF and net asset value growth going forward.
The company’s Q4 results were great, as revenue of $1.7 billion increased 39% from a year ago, while earnings of $1.03 per share continued the recent gains in the bottom line. Looking ahead, analysts see big 2025 growth due to the acquisition and higher realized prices; a generous dividend (a 2.6% yield) is an added attraction.
Technical Analysis
After a mostly solid first eight months of 2024, AU encountered some turbulence in late August, with the stock starting what became a 24-week, double bottom base that took shares down as much as 31%. However, the calendar flip saw AU immediately spring back to life (along with the gold price) and take flight to new highs into February. The recent four-week rest was normal and found support near the 10-week line, with the push to new highs obviously a good sign. Stop – 30
The Covered Call Trade
Buy AngloGold Ashanti (AU) Stock at 36, Sell to Open May 36 Strike Calls (exp. 5/16) for $2, or a Net Price of 34 or less
Static Return: $200 per covered call (5.88%)
Breakeven: 34
Covered Call Return (if assigned): $200 per covered call (5.88%)
Please note, the stock and options prices will be moving throughout the day, so these prices are simply an approximation of prices that you should be able to achieve.
However, the important component of this equation is that the stock price paid, minus the premium received via the call sale, equals the approximate Net Price, or 34 or less. (In this case 36 minus 2 = 34. Or another example is you could pay 35.75 for the stock and sell the call for 1.75, which also equals 34)
For every 100 shares of stock you buy, you can sell 1 call. For every 200 shares of stock you buy, you can sell 2 calls. And so on …
Open Positions
| Stock Name and Symbol | Price Bought | Current Stock Price | Stop | Option - Price of Call Sold | Current Option Price |
| Royalty Pharma (RPRX) | 34 | 34 | 29 | April 35 -- $0.75 | $0.30 |
| Exelixis (EXEL) | 38.25 | 38 | 32.5 | April 39 -- $2.20 | $0.75 |
| Uber (UBER) | 72 | 76 | 66 | April 70 -- $5.40 | $7.00 |
| Rubrik (RBRK) | 70 | 75 | 57 | April 70 -- $4.60 | $6.50 |
The next Cabot Profit Booster issue will be published on April 1, 2025.
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