The precious metals market plummeted as Pfizer (PFE) and BioNTech SE (BNTX) announced that they have a vaccine with a 90% efficacy rating against coronavirus. With an expected V-shaped recovery amplified by the vaccine deployment, investors shifted their focus from safe-haven assets to reviving companies. Following this news, both gold and silver witnessed a sell-off.
However, while the vaccine is more than 90% effective in preventing COVID-19, the extremely low temperature of minus 70 degrees Celsius storage requirements and pending FDA approval can pose a big challenge for a successful rollout. Thus, gold and silver are likely to regain its value soon, as a second wave threat could lead to more lockdowns.
Over the upcoming months, we are likely to witness a bounce in the silver price. Wheaton Precious Metals Corp (WPM), Pan American Silver Corp. (PAAS), and MAG Silver Corp. (MAG) are likely to outperform.
Wheaton Precious Metals Corp. (WPM)
WPM is a mining company that sells precious metals like gold, silver, and palladium ores in Canada and internationally. The company has signed agreements for 9 development stage projects and 20 operating mines.
WPM started trading on the London Stock Exchange on October 28th. This should increase the stock’s trading volume and liquidity in the long term.
WPM’S sales increased by 23.9% sequentially to $307.27 million in the third quarter ended in September 2020. Net income grew 97.3% from the year-ago value to $149.88 million. Cash flow from operations increased 60.3% year-over-year to $228.10 million, while EPS rose 96.5% from the prior-year quarter to $0.33.
The consensus EPS estimate of $0.39 for the current quarter ending December 2020 indicates a 129.4% improvement year-over-year. Moreover, WPM beat the street EPS estimates in three out of the trailing four quarters, which is impressive. The consensus revenue estimate of $351.24 million for the current quarter indicates a 57.4% growth from the same period last year. The stock has gained 48.4% year-to-date. The stock is ranked #5 out of 11 in the Miners – Silver industry.
Pan American Silver Corp. (PAAS)
PAAS is engaged in the exploration, extraction, processing, development, and refining of silver in Argentina, Mexico, Peru, Bolivia, and Canada. It deals in other precious metals like gold, zinc, lead, and copper and operates in the mines of La Colorada, Dolores, Escobal, Shahuindo, La Arena, and Timmins.
PAAS has recently resumed operations in Huaron and Morococha mines of Peru. This re-opening will increase its annual production and generate higher revenues.
On August 4th, PAAS reported an estimated extraction of 141 million ounces of silver for its La Colorada mine, up 38% year-over-year.
PAAS’s mine operating earnings increased 95.1% year-over-year to $124.56 million in the third quarter ended September 2020. Net cash from operating activities rose 40.3% from the prior-year quarter to $114.94 million. Net income grew 73% from the year-ago value to $65.26 million, while EPS increased 72.2% year-over-year to $0.31.
The consensus EPS estimate of $0.49 for the current quarter ending December 2020 indicates a 48.5% improvement year-over-year. The consensus revenue estimate of $479.18 million for the current quarter indicates an 18.5% growth from the same period last year. The stock has gained 34.4% year-to-date.
PAAS’s promising outlook is reflected in its POWR Ratings. It is rated “Buy” with a “B” for Trade Grade and Peer Grade. It is ranked #1 in the same industry.
MAG Silver Corp. (MAG)
MAG is a mining company that engages in the development, exploration, and acquisition of mineral properties in the USA. The company is involved in the exploration of gold, zinc, and lead deposits. It currently holds a 44% stake in the Juanicipio project in Mexico.
On October 21st, MAG announced its first production of 42,476 tonnes from the Juanicipio Project. This successful processing will increase cash flow and revenues in the future.
MAG has recently announced its acquisition of the silver-rich Deer Trail Project in Utah. This will significantly drive the company’s business growth and establish them as the dominant silver mining company in the United States.
MAG’s operating income increased 35% year-over-year to $1.30 billion in the second quarter ended June 2020. The stock has gained 44.5% year-to-date.
It’s no surprise that MAG is rated “Buy” in our POWR Ratings system. It has an “A” for Trade Grade and Peer Grade. Among the 11 stocks in the same industry, it is ranked #2.
Fortuna Silver Mines Inc. (FSM)
FSM focuses on the exploration, processing, and extraction of precious metal deposits of gold, silver, lead, and zinc in Latin America. The primary mines of the company include the Caylloma silver, lead, and zinc mine of southern Peru, the San Jose silver-gold mine of southern Mexico, and the Lindero gold project of Argentina.
On October 21st, FSM reported its first 728 ounces gold pour at the Linderdo mine located in Argentina. The company recently announced the production of 2.1 million ounces of silver and 12,791 ounces of gold from its two operating mines in Latin America. This will boost the company’s revenue.
FSM’s sales from silver-lead concentrates in Peru increased 8.6% year-over-year to $8.65 billion in the second quarter ended June 2020, while cash flow from trade and other receivables increased 64.4% from the year-ago value to $3.45 billion.
The consensus EPS estimate of $0.22 for the current quarter ending December 2020 indicates a 24.4% improvement year-over-year. The consensus revenue estimate of $260.89 million for the fourth quarter indicates a 1.4% growth from the same period last year. The stock has gained 76% year-to-date.
FSM’s strong fundamentals are reflected in its POWR Ratings. It has a “Buy” rating with an “A” for Trade Grade and Peer Grade and a “B” for Buy & Hold Grade. The stock is ranked #3 in the same industry.
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WPM shares were trading at $45.11 per share on Thursday afternoon, up $0.48 (+1.08%). Year-to-date, WPM has gained 52.80%, versus a 11.36% rise in the benchmark S&P 500 index during the same period.
About the Author: Imon Ghosh
Imon is an investment analyst and journalist with an enthusiasm for financial research and writing. She began her career at Kantar IMRB, a leading market research and consumer consulting organization.4 'Buy the Dip' Silver Mining Stocks appeared first on StockNews.com