Gold Stock Hit With Downgrades Yet Still Valuable

Gold miner Randgold Resources has been slapped with five downgrades in 2016, yet the stock refused to dull its shine, and is up an astounding 94 percent this year. Jim Cramer explained the run, stating that the strength in Randgold is about more than just the underlying commodity.

"I used to see this pattern a lot back at my old hedge fund, and it typically meant that big institutional money managers had fallen in love with a stock," the "Mad Money" host said.

Normally when a stock is hit with a wave of downgrades, it tends to be crushed. Other analysts worried about seasonal fluctuations and Randgold's difficult comparisons versus 2015.

"Fast forward to today, and the bear case couldn't have been more wrong," Cramer said.

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The price of gold has actually risen due to increased economic turmoil, which Cramer related to Britain's vote to leave the EU. That business model indicates the company is less held hostage to the price of gold than other miners, as it can turn a profit even when the price of going is going down.

Ultimately, Cramer highlighted Randgold for the purpose of teaching investors how to spot a stock that will continue to rise in the face of downgrades. He has always recommended that investors have some gold exposure in their portfolio as an insurance against inflation or economic chaos.

"If you think gold is headed back to all-time highs, then with Randgold you've finally found a stock that is better than bullion itself.

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