AngloGold Ashanti's Strong Performance in Basic Materials Sector

AngloGold Ashanti (AU) has outperformed the Basic Materials sector this year, with a 148.1% year-to-date gain, compared to the sector's 14.5% gain. The company has a Zacks Rank of #2 (Buy) and a 48.5% increase in full-year earnings estimates over the past 90 days. Gold Fields (GFI) is another Basic Materials stock that has outperformed the sector, with a 137.7% year-to-date gain and a Zacks Rank of #1 (Strong Buy).

AngloGold Ashanti (AU) has demonstrated exceptional performance this year, surging 148.1% year-to-date, significantly outperforming the Basic Materials sector's 14.5% gain. The company's Zacks Rank of #2 (Buy) reflects strong investor confidence, bolstered by a 48.5% increase in full-year earnings estimates over the past 90 days [1].

The second-quarter results, released on August 1, 2025, revealed a 21% year-over-year increase in gold production to 804,000 ounces, driven by the acquisition of the Sukari mine and improved output at key operations. Gold revenues rose 78% to $2.4 billion, and earnings per share increased 108% to $1.25, due to higher sales volumes and prices [1].

However, the gains were partially offset by higher total operating costs, including increased royalty expenses and costs associated with the Sukari mine. Total cash costs per ounce for the group were up 8% to $1,226, while all-in-sustaining costs (AISC) per ounce increased 7% to $1,666 [1].

Despite these cost increases, AngloGold Ashanti generated $535 million in free cash flow in the second quarter, a 149% year-over-year increase. The company has successfully reduced its adjusted net debt by 92% year over year to $92 million, improving the adjusted net debt to adjusted EBITDA ratio to 0.02X [1].

The company's forward 12-month earnings multiple is 11.78X, a discount to the industry average of 13.45X, making it an attractive valuation relative to its peers [1]. The average price target on AU suggests a 15.49% downside from its last closing price of $58.28, indicating potential upside potential.

Gold Fields (GFI) is another Basic Materials stock that has outperformed the sector, gaining 137.7% year-to-date with a Zacks Rank of #1 (Strong Buy) [2].

Investors should closely monitor AngloGold Ashanti's ability to sustain margin growth and manage operational and geopolitical risks. The company's full-year production and cost management guidance reaffirmation on August 1, 2025, provides continuity regarding its ability to keep operational costs aligned with its expanded output [2].

References:
[1] https://www.theglobeandmail.com/investing/markets/stocks/AU/pressreleases/33969036/anglogold-ashanti-up-26-since-q2-results-how-to-play-the-stock/
[2] https://simplywall.st/stocks/us/materials/nyse-au/anglogold-ashanti/news/anglogold-ashanti-au-is-up-228-after-surging-earnings-divide