Silver prices have been on fire of late in part thanks to a recent “social-media” induced rally. The price of the commodity has increased nearly 10% over the past week because of certain posts on Reddit’s stock discussion board, WallStreetBets. These posts prompted retail traders to bet on assets preferred by short sellers. The same phenomenon was witnessed a few days ago with GameStop (GME) stock. Many traders also rushed to buy physical silver because of its low-ticket price when compared with gold. Silver prices have also moved higher on the back of hopes of additional fiscal stimulus.

However, silver prices  have already given back some of the sudden gains and settled at nearly $950 per kilogram. It is important that investors keep in mind that a rally sparked by social-media platforms is not based on fundamentals. To generate long-term returns, investors must evaluate the underlying strength in a company or commodity.

It is true that silver mining stocks are currently seeing strong momentum. We believe that though the “silver-squeeze” effect may be short-lived, the commodity will continue  its bull run on the back of its universal demand. Silver’s uses go way beyond jewelry. The metal has immense utility in the manufacture of solar panels, electronics, electric cars, among other industrial uses.

Silver mining companies are reaping raping the benefits of the metal’s wide application, and we think  Silvercorp Metals Inc. (SVM), Great Panther Mining Limited (GPL), and Wheaton Precious Metals Corp (WPM) are likely to continue their advance in the near-term.

Silvercorp Metals Inc. (SVM)

SVM is involved in exploring, acquiring, and developing mineral properties in China. The company  mines silver, gold, lead, and zinc mainly. SVM also holds a stake in the Ying silver-lead-zinc project located in the Ying Mining District in Henan Province, China,  and in GC silver-lead-zinc mine in Guangdong Province, China.

SVM’s subsidiary, New Infini Silver Inc, has acquired the La Yesca silver project in Nayarit State, Mexico. The company stated that the project covers an area of approximately 47.7 square kilometers and includes geological mapping, stream sediment, and soil geochemical surveys.

During the third quarter ended September 30, 020, SVM’s revenue climbed 13% year-over-year to $56.3 million. Its EPS for the quarter increased to $0.09 from $0.07 posted in the same period last year. SVM ended the quarter with a $95.3 million cash balance. It produced nearly 1.7 million ounces of silver, 900 ounces of gold, 17.1 million pounds of lead, and 8.7 million pounds of zinc for the quarter.

Analysts expect revenue for the quarter ended December 30, 2020 to be $59.1 million, representing  a 32.8% year-over-year growth. Its EPS is likely to grow 100% to $0.08.

SVM has advanced  55.8% over the past year to close yesterday’s session at $6.69. Over the past six months, the stock climbed 11.9%.

SVM’s strong fundamentals are reflected in its POWR Ratings. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

The stock has an overall rating of B which equates to Buy in our proprietary rating system. SVM has a grade of A for Momentum, and a B grade for Quality. Out of the 16 stocks in the Miners – Silver industry, it is ranked #1.

In addition to the POWR Ratings grades I have just highlighted, you can see SVM’s ratings for Growth, Value, Sentiment and Stability here.

Great Panther Mining Limited (GPL)

GPL is a precious metals mining company that explores for gold, silver, copper, lead, and zinc ores. Tucano gold mine in Amapa State, Brazil, two silver mines in Mexico, the Guanajuato mine complex and the Topia mine in Mexico are GPL’s main operating t properties.

GPL  exploration programs in 2020 were successful in extending the life of its existing open pit mine at Tucano and in  adding significant resources to its  mineral inventory at  the Guanajuato Mine Complex. The company’s president and CEO, Rob Henderson, added that “2021 will represent a significant increase in our exploration efforts with a planned record of 90,000 meters of drilling representing a $13 million investment.”

GPL’s revenue for the third quarter ended September 30, 2020 climbed 8.5% year-over-year to $77 million. Its EPS for the quarter was $0.05 compared to a loss per share of $0.03 posted in the same period last year. The company’s adjusted EBITDA for the quarter was $34.9 million, and its cash flow from operations was $19.7 million.

A consensus revenue estimate for the quarter ended December 31, 2020 is $64.4 million, representing a 2% decline year-over-year. Meanwhile, its  EPS is likely to decrease 60% to $0.02.

Over the past year, GPL has climbed 51% to end yesterday’s trading session at $0.84. Over the past six months, the stock has risen  17%.

It is no surprise that GPL has an overall rating of B, which equates to Buy in our POWR Ratings system. The POWR Ratings are calculated by taking into account 118 different factors with each factor weighted to an optimal degree.

GPL has a Momentum Grade of A.  Also, it has a grade of B for Value, Sentiment and Growth. In the Miners – Silver industry, it is ranked #2.

Click here to see the additional POWR Ratings for GPL (Stability and Quality).

Wheaton Precious Metals Corp (WPM)

WPM primarily sells precious metals ores such as gold, silver, and palladium  in Canada and globally.  The company has entered agreements to  operate 20 mines and nine development-stage projects.

During the third quarter ended September 30, 2020, WPM’s silver sales surged 61% year-over-year to $123.4 million. Its total sales for the period climbed 37% over the year to $307.3 million. And its EPS for the quarter rose to $0.50 from $0.32 posted in the prior year period.

Analysts expect WPM revenue for the quarter ending December 31, 2020 to be $341 million, representing  52.7% growth year-over-year. Its EPS is likely to rise 117.6% to $0.37.

WPM has surged 47% over the past year to end yesterday’s trading session at $41.11. During the past six months, WPM declined 20.3%.

The POWR Ratings are also bullish on WPM as it has a Buy rating. The POWR Ratings are calculated by considering 118 different factors with each factor weighted to an optimal degree.

The stock has a grade of A for Momentum and Quality, and a B for Growth. It is ranked #3 in the Miners – Silver industry.

In total, we rate WPM on eight  different levels. Beyond what we stated above, we also have given WPM grades for Sentiment, Stability, and Value. Get all the WPM ratings here .

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SVM shares were trading at $6.64 per share on Wednesday morning, down $0.05 (-0.75%). Year-to-date, SVM has declined -0.75%, versus a 2.04% 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. More...

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