4 Beaten Down Silver Miners to Buy as the Economic Outlook Sours

NYSE: WPM | Wheaton Precious Metals Corp News, Ratings, and Charts

WPM – The World Bank and the OECD nations have slashed their global growth forecasts for this year due to the ongoing war in Europe, supply-chain issues, and inflation. Amid this, the demand for silver is poised to explode. Hence, we think the beaten-down silver mining stocks Wheaton Precious Metals (WPM), Endeavour Silver (EXK), First Majestic Silver (AG), and Silvercorp (SVM) might be the ones to watch now.

After the World Bank slashed its global economic expansion forecast by 1.2 percentage points to 2.9% this year and warned that economies might be tipping closer to stagflation, the OECD nations, which includes the United States, gave similar predictions, cutting down growth estimates for this year from 4.5% to 3%. The untamed inflation amid the Russia-Ukraine war and supply chain issues are souring the economic outlook.

The prevailing economic conditions and the outlook might incite a rush into precious metals like silver. Silver mining rebounded last year, with mine production increasing by 5%. On the other hand, miners grappling with inflation might not ramp up production, while demand for the metal is poised to explode as silver plays an instrumental role in green technologies.

Given this backdrop, the beaten-down silver mining stocks Wheaton Precious Metals Corp. (WPM), Endeavour Silver Corp. (EXK), First Majestic Silver Corp. (AG), and Silvercorp Metals Inc. (SVM) might be solid additions to one’s watchlist.

Wheaton Precious Metals Corp. (WPM)

WPM operates as a streaming company and precious metals seller in Canada and globally. The company’s offerings include gold, silver, palladium, and cobalt deposits. It is headquartered in Vancouver, Canada.

On May 5, WPM declared a second quarterly dividend of $0.15 per common share, which was payable to shareholders on or about June 3. This reflects upon the company’s cash generation and shareholder return ability.

For the fiscal first quarter ended March 31, WPM’s gross margin increased 2.7% year-over-year to $179.85 million. Cash generated from financing activities came in at $5.57 million, up substantially from its negative year-ago value. Cash and cash equivalents balance improved 96.8% from the same period the prior year to $376.16 million.

The consensus EPS estimate of $0.37 for the quarter ending September 2022 indicates a 23.3% year-over-year increase. Likewise, the consensus revenue estimate for the same quarter of $328.85 million reflects an improvement of 22.3% from the prior-year quarter.

The stock has declined 6.9% year-to-date but gained marginally over the past month to close yesterday’s trading session at $39.96.

Endeavour Silver Corp. (EXK)

EXK is a silver mining company headquartered in Vancouver, Canada, that primarily explores gold and silver deposits. The company acquires, explores, processes, and refines mineral properties in Mexico and Chile.

In April, EXK reported positive drill results from its ongoing exploration program at its Parral project in the State of Chihuahua, Mexico, and its ongoing exploration program at the Guanacevi Mine in Durango State, Mexico. The drill results might benefit the company.

On March 22, EXK announced the completion of its prospectus offering for the issuance of its common shares. The company intends to use the net proceeds from the offering to pay for its acquisition of the Pitarrilla project in Durango State, Mexico, general corporate purposes, and working capital.

EXK’s revenues increased 67.5% year-over-year to $57.74 million in the fiscal first quarter ended March 31. Adjusted net earnings and adjusted net earnings per share improved 356.8% and 333.3% from the prior-year period to $11.66 million and $0.07, respectively.

Analysts expect EXK’s EPS to increase 200% year-over-year to $0.03 for the fiscal quarter ending September 2022. Likewise, Street expects revenue for the same quarter to rise 38.7% from the prior-year quarter to $47.93 million.

The stock is down 16.6% year-to-date to close yesterday’s trading session at $3.52. It is up marginally over the past month.

First Majestic Silver Corp. (AG)

AG, headquartered in Vancouver, Canada, acquires, explores, and develops mineral properties. The company is focused on developing gold and silver properties in North America and holds interests in several mines.

On May 25, AG announced that it had entered into a definitive agreement to sell its 100% owned past producing La Guitarra Silver Mine in the Temascaltepec mining district, Mexico State, to Sierra Madre Gold & Silver Ltd. for a total consideration of $35 million.

On March 17, AG announced the extension of its share repurchase program that is expected to enable the company to purchase up to 10 million of its common shares. This might benefit the existing shareholders of the company.

For the fiscal first quarter ended March 31, AG’s revenues increased 56% year-over-year to $156.84 million. Net earnings for the period and earnings per common share came in at $7.29 million and $0.03, up 292.7% and 200% from the prior-year period.

Street EPS estimate for the quarter ending June 2022 of $0.07 reflects a rise of 40% from the prior-year quarter, while Street revenue estimate for the same quarter of $186 million indicates an improvement of 20.7% from the same period the prior year.

AG’s stock has declined 28.5% year-to-date and 2.8% over the past month to close yesterday’s trading session at $7.94.

Silvercorp Metals Inc. (SVM)

SVM engages in acquiring, exploring, and developing mineral properties in China and Mexico and operates primarily mining silver, gold, lead, and zinc. The company is based in Vancouver, Canada.

On May 27, SVM announced a semi-annual dividend of $0.0125 per share, payable to shareholders on or before June 24. This reflects the company’s ability to pay back its shareholders.

SVM’s revenue increased 16.4% year-over-year to $41.59 million in the fourth fiscal quarter ended March 31. Net cash generated from operating activities rose 411.3% from the same period last year to $11.41 million, while cash, cash equivalents, and short-term investments went up 6.9% from the prior-year quarter to $212.93 million.

The consensus EPS estimate of $0.32 for the fiscal year 2023 indicates a 6.7% year-over-year increase. Likewise, the consensus revenue estimate for the same year of $228.90 million reflects an improvement of 5% from the prior year.

SVM’s shares have declined 27.4% year-to-date to close yesterday’s trading session at $2.73. However, it has gained 1.1% over the past month.

WPM shares were trading at $38.86 per share on Tuesday morning, down $1.10 (-2.75%). Year-to-date, WPM has declined -8.85%, versus a -20.89% rise in the benchmark S&P 500 index during the same period.

About the Author: Anushka Dutta

Anushka is an analyst whose interest in understanding the impact of broader economic changes on financial markets motivated her to pursue a career in investment research. More...

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