Tuesday newspaper share tips: Randgold a good investment to get gold exposure

Solid results for Randgold Resources has given hope to The Telegraph’s Questor, which recommended investors 'hold' the shares.

The company was in a surprisingly robust position in its end-of-year-results, despite lower gold prices pushing the company's profit down in the 12 months to 31 December 2015.

Production and costs were in line with the company's annual guidance, with the FTSE 100 company setting a new production record of more than 1.2m ounces - up 6% on the previous year.

Group total cash cost per ounce was down 3% to $679 (£467.60) per ounce. In the fourth quarter, that was down to $632 per ounce.

The firm reported strong cash flows from operations, boosting cash on hand by 158% to $213.4m, though profits for the year were down due to lower gold prices - to $212.8m from $271.2m a year earlier.

Nevertheless, Randgold's board proposed a 10% increase in the annual dividend, which the board said reflected the strong cash flows generated by the business.

Questor said with market jitters sending the price of gold higher, the company remains one of the best defensive options.

On top of that, it pointed out Randgold has gone through a major investment phase to reduce the cost of production.

“[It] can live with lower gold prices for longer than many other smaller and higher-cost producers.”

Questor believed the company can survive the commodities downturn and should be in a position to buy assets at a discount at some point.

It said the shares aren’t cheap at 27 time earnings are investors are paying a premium.

“That said, this looks like one of the best places to get pure gold exposure through buying shares in a FTSE 100 listed company.”

Over in The Times, Tempus was looking ahead to Rolls-Royce’s full year results due on Friday, predicting that it wouldn’t come as a surprise if the company’s dividend was cut – the first time in 24 years.

“The latest in a string of profit warnings, in November, held that “shareholder payments policy will be reviewed”, and it was obvious that this was not going to mean an increase,” Tempus highlighted.

The column highlighted that Rolls-Royce has also warned in November that full-year numbers will come in at the bottom of expectations.

That’s due to a reduction in the number of Trent 700 engine sales as airlines move to more economical jets, plus falling sales to the oil and gas market.

Tempus said analysts believed the company could return to 2015 levels of profitability by 2020, but questioned whether the market can wait that long.

“I do not think we are looking at yet another profit warning. Nor are we looking at much short-term improvement.”

With a few difficult years ahead, Tempus advised to ‘avoid for now’.