Critical Comparison: New Gold (NYSE:NGD) & Amerigo Resources (OTCMKTS:ARREF)

New Gold (NYSE:NGD) and Amerigo Resources (OTCMKTS:ARREF) are both basic materials companies, but which is the better investment? We will compare the two companies based on the strength of their earnings, profitability, analyst recommendations, valuation, institutional ownership, risk and dividends.

Earnings & Valuation

This table compares New Gold and Amerigo Resources”s top-line revenue, earnings per share and valuation.

	Gross Revenue	Price/Sales Ratio	Net Income	Earnings Per Share	Price/Earnings Ratio
New Gold	$810.80 million	2.85	-$64.50 million	($0.10)	-29.25
Amerigo Resources	$157.46 million	1.32	$3.38 million	($0.01)	-125.50

Amerigo Resources has lower revenue, but higher earnings than New Gold. Amerigo Resources is trading at a lower price-to-earnings ratio than New Gold, indicating that it is currently the more affordable of the two stocks.

Volatility & Risk

New Gold has a beta of 1.3, suggesting that its share price is 30% more volatile than the S&P 500. Comparatively, Amerigo Resources has a beta of 3.02, suggesting that its share price is 202% more volatile than the S&P 500.

Analyst Recommendations

This is a breakdown of recent ratings and recommmendations for New Gold and Amerigo Resources, as reported by MarketBeat.com.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
New Gold	0	2	3	2	3.00
Amerigo Resources	0	0	0	0	N/A

New Gold currently has a consensus target price of $2.74, indicating a potential downside of 6.27%. Given New Gold’s higher probable upside, analysts plainly believe New Gold is more favorable than Amerigo Resources.

Profitability

This table compares New Gold and Amerigo Resources’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
New Gold	-2.53%	5.22%	2.03%
Amerigo Resources	7.16%	11.50%	6.08%

Institutional & Insider Ownership

42.8% of New Gold shares are held by institutional investors. 0.2% of New Gold shares are held by insiders. Comparatively, 19.3% of Amerigo Resources shares are held by insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a company is poised for long-term growth.

About New Gold

New Gold Inc., an intermediate gold mining company, develops and operates of mineral properties in Canada. It primarily explores for gold, silver, and copper deposits. The company’s principal operating properties include 100% interest in the Rainy River mine located in Northwestern Ontario, Canada; and New Afton project situated in South-Central British Columbia. New Gold Inc. is headquartered in Toronto, Canada.

About Amerigo Resources

Amerigo Resources Ltd., through its subsidiary, Minera Valle Central S.A., engages in the production and sale of copper and molybdenum concentrates from Codelco's El Teniente underground mine in Chile. The company was formerly known as Golden Temple Mining Corp. and changed its name to Amerigo Resources Ltd. in March 2002. The company was incorporated in 1984 and is headquartered in Vancouver, Canada.