Assessing ASA Gold and Precious Metals’s Valuation After Saba Capital’s Latest Insider Buy

Saba Capital Management’s latest insider buy in ASA Gold and Precious Metals (ASA), adding over 9,000 shares at around 53 dollars each, puts fresh attention on what this big shareholder might be seeing in the period ahead.

See our latest analysis for ASA Gold and Precious Metals.

That conviction lines up with a powerful run in ASA’s share price, which now sits at 52.76 dollars after a roughly 14 percent 1 month share price return and a standout 1 year total shareholder return of about 160 percent. This suggests momentum is still very much on the side of the bulls.

If this kind of momentum has you thinking more broadly about opportunities, it could be worth exploring fast growing stocks with high insider ownership to spot other stocks where management and major holders are backing their own story.

But after such a powerful run and a solid long term track record, is ASA still trading below what its portfolio and prospects justify, or has the market already priced in the next leg of precious metals growth?

Price-to-Earnings of 2.7x: Is it justified?

On a simple earnings lens, ASA Gold and Precious Metals looks optically cheap at 2.7 times earnings compared to a 52.76 dollars share price that has already surged.

The price to earnings multiple compares what investors pay for each dollar of current earnings. It is often a core yardstick for capital markets and asset management businesses where profit generation, not top line growth, drives value.

With earnings up 330.7 percent over the past year and 16.8 percent per year over five years, plus a 46.3 percent return on equity that is described as outstanding, the market appears to be pricing ASA’s recent profit strength very conservatively at this stage.

Against peers, that 2.7 times price to earnings ratio stands in stark contrast to the US Capital Markets industry average of 23.8 times and a peer group average of 23.4 times. This suggests investors are assigning a heavy discount despite ASA having outpaced both the broader US market and its own industry on one year returns.

See what the numbers say about this price — find out in our valuation breakdown.

Result: Price-to-Earnings of 2.7x (UNDERVALUED)

However, ASA’s fortunes remain tightly tied to volatile precious metal prices and global risk sentiment, which could quickly dampen recent performance and valuation appeal.

Find out about the key risks to this ASA Gold and Precious Metals narrative.

Another View: Our DCF Model Flashes Caution

While ASA looks inexpensive on an earnings basis, our DCF model points in the opposite direction and suggests the stock is trading above an estimated fair value of 8.37 dollars. That implies potential downside risk if recent gains and one-off boosts to profit do not persist. Which lens do you place more weight on?

Look into how the SWS DCF model arrives at its fair value.

Simply Wall St performs a discounted cash flow (DCF) on every stock in the world every day (check out ASA Gold and Precious Metals for example). We show the entire calculation in full. You can track the result in your watchlist or portfolio and be alerted when this changes, or use our stock screener to discover 919 undervalued stocks based on their cash flows. If you save a screener we even alert you when new companies match - so you never miss a potential opportunity.

Build Your Own ASA Gold and Precious Metals Narrative

If you would rather dive into the numbers yourself and draw your own conclusions, you can build a custom view in just minutes: Do it your way.

A great starting point for your ASA Gold and Precious Metals research is our analysis highlighting 2 key rewards and 2 important warning signs that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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