The U.S. dollar has lost nearly 6% of its value since the beginning of the year. A sluggish economy and a decline in international trade are among the main reasons why this has happened. Adding to its woes are the Federal Reserve’s loose monetary policy and governmental stimulus packages this year, with another one now imminent.
In such a scenario, investors flock to safe-haven assets like gold and silver. Silver is not just a precious metal it also has industrial uses. It is one of the best electrical and thermal conductors, and this feature makes it a critical component for electrical applications. Besides, the solar energy sector is also a major consumer of silver because the metal is needed in solar panels.
As the world is now haltingly shifting to clean energy, silver is likely to see burgeoning demand. Also, ongoing uncertainty about global economic recovery will likely continue to boost silver’s appeal as a hedge against volatility.
The price of silver is on the rise. In July, spot silver futures hit$22.83 an ounce, its highest level since 2013. Currently, it is trading in the range of $24-$25 in spot markets. So, it may be wise now to consider investing in physical silver, shares of companies that mine silver, or ETFs that have exposure to the metal.
As silver mining companies directly benefit from rising silver prices, First Majestic Silver Corp. (AG), MAG Silver Corporation (MAG), Fortuna Silver Mines Inc (FSM), and SilverCrest Metals Inc. (SILV) may be well positioned to experience good times ahead.
First Majestic Silver Corp. (AG)
AG is primarily involved in acquiring, exploring, and producing and developing mineral properties focused on silver in Mexico. The company holds 100% interests in San Dimas Silver/Gold Mine, which comprises119 concessions. AG also has interest in the Springpole gold and silver project, covering an area of nearly 41,943 hectares in Ontario, Canada.
AG has announced that its Board of Directors have adopted a new dividend policy under which the company intends to pay quarterly dividends of 1% of its net revenues, beginning after the close of the first quarter of 2021.
During the three months ended September 30, 2020, AG’s revenue surged 29.7% year-over-year to $125.9 million. EPS for the quarter rose to $0.14 from $0.04 posted in the same period last year. And the company ended the quarter with cash and cash equivalents of $232.4 million, representing a 95.9% year-over-year growth.
Analysts expect revenue for full year 2020 to be $330.3 million, representing a 9.2% decline year-over-year. EPS for the period is likely to surge 75% to $0.07.
On a year-to-date basis, AG fell 7.1% to end yesterday’s session at $12.21. Over the past six months, the stock gained 52.4%.
How does AG stack up for the POWR Ratings?
B for Trade Grade
B for Peer Grade
B for Overall POWR Rating.
It is currently ranked #1 of 12 stocks in the Miners - Silver Industry.
MAG Silver Corporation (MAG)
MAG is a leading explorer and developer of silver, gold, lead, and zinc mainly in the Americas region. Based in Canada, the company has 44% interest in the Juanicipio project in the Fresnillo District, of Mexico.
During the past three months ended September 30, 2020, MAG’s loss per share rose to at $0.04 from $0.02. At the end of the quarter, its cash and cash equivalent totaled $136 million.
MAG’s consensus revenue estimate for the full year 2020 is $44.7 million, while its loss per share for the period is likely to be $0.15. MAG has surged 59% on a year-to-date basis to end yesterday’s trading session at $17.70. During the past six months, MAG has rallied 52.9%.
It is no surprise then that MAG is rated a “Buy” with a “B” for Trade Grade, Buy & Hold Grade, and Peer Grade. In the Miners - Silver industry, it is ranked #2.
Fortuna Silver Mines Inc (FSM)
FSM is a miner focused on precious and base metal deposits that include silver, gold, lead, and zinc in Latin America. The Caylloma silver, lead, and zinc mine in southern Peru; the San Jose silver-gold mine in southern Mexico; and the Lindero gold project in Argentina are some of FSM’s principal properties. During the three months ended September 30, 2020, FSM’s revenue climbed 36.1% year-over-year to $83.4 million. EPS for the quarter was $0.07 compared to a loss per share of $0.05 posted in the same period last year. The company’s Silver and gold production during the quarter was 2.1 million ounces and 12,791 ounces, respectively. FSM ended yesterday’s trading session at $7.33, gaining 83% on a year-to-date basis.
The Street estimates revenue for the full year ending 2020 to be $216.8 million, representing a 15.7% year-over-year decline. Meanwhile, EPS is likely to grow 5.9% to $0.18.
FSM’s POWR Ratings reflect this promising outlook. It has an overall rating of “Buy” with an “A” for Trade Grade and Peer Grade, and a “B” for Buy & Hold Grade. Among the 12 stocks in the Miners - Silver Industry, it is ranked #3.
SilverCrest Metals Inc. (SILV)
SILV explores primarily for silver and gold in Mexico. Its Las Chispas project, which comprises 28 concessions spanning more than 1400.96 hectares located in Sonora is the company’s primary property.
In August, SILV acquired the El Picacho project from a Mexican company, American Metal Mining, for $1.6 million. This project includes 11 neighboring concessions covering 7,060ha in Sonora State. The company plans to begin drilling by year’s end, pending its receipt of permits.
SILV closed the third quarter ending September 30, 2020 with cash and cash equivalents of $188.3 million. The company’s loss per share expanded to $0.18 from $0.17 posted in the same period last year. During the nine months ended September 30, 2020, SILV’s exploration team completed 146,000 meters of in-fill and expansion drilling at its Las Chispas Project. On a year-to-date basis, SILV has climbed 51% to close yesterday’s trading session at $51.04. Analysts expect loss per share for full year 2020 to be $0.41.
SILV’s POWR Ratings reflect its promising outlook. It has an overall rating of “Buy” with a “B” for Trade Grade and Buy & Hold Grade. Among the 12 stocks in the Miners - Silver Industry, it is ranked #4.
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AG shares were trading at $12.59 per share on Wednesday afternoon, up $0.38 (+3.11%). Year-to-date, AG has gained 2.69%, versus a 16.90% rise in the benchmark S&P 500 index during the same period.
About the Author: Namrata Sen Chanda
Namrata is an accomplished financial journalist, with nearly a decade of experience. She specializes in interpreting news releases and framing investment strategies, and has worked with some of the leading companies in real estate, banking, insurance, mutual funds, financial research, fintech, and investment education.4 Silver Miners to Buy as the Dollar Continues to Weaken appeared first on StockNews.com