Silver prices (SIN24) have skyrocketed this year, propelled higher by a number of factors. Rising geopolitical tensions have contributed to increased demand for safe havens, but there's also a silver supply crunch looming in the background, according to industry analysts. Amid surging interest in the metal from industrial sources, there's a strong underpinning of demand for silver right now - which means the recent correction in prices could present a prime buying opportunity.
Against this backdrop, here's a look at two silver mining stocks with plenty of upside potential.
Silver Stock #1: Mag Silver Corp.
Mag Silver Corp. (MAG) is a silver exploration and development company that focuses on the acquisition, exploration, and development of silver properties. They also provide underground development infrastructure for their mining operations and also partner with other mining companies for exploration projects. Headquartered in Vancouver, its operations are mainly focused in Mexico.
Valued at $1.35 billion by market cap, Mag Silver stock is up 22% YTD, and trades not far from its 52-week high of $13.39.
Mag reported its Q4 results back on March 18, with earnings of $15.7 million, or $0.14 per share, surpassing analysts’ estimate of $0.13 per share. For the year, net income came in at $48.7 million, or $0.47 per share, and adjusted EBITDA arrived at $97.5 million, largely driven by its Juanicipio project.
The company ended the year with an operating cash flow of $145 million.
Looking ahead to fiscal year 2024, Wall Street expects MAG to expand its bottom line by 17% to $0.55 per share, with continued EPS growth of 32% to $0.73 per share in fiscal 2025.
What Do Analysts Think of MAG?
Analysts are upbeat on MAG, with a consensus “Strong Buy” rating and a mean price target of $14.93. That translates to an expected upside potential of 17.6% from current levels.
Out of 12 analysts in coverage, 8 have a “Strong Buy” call, 2 have a “Moderate Buy” rating, and the remaining 2 have a “Hold” rating on the silver stock.
Silver Stock #2: Silvercorp Metals Inc.
Silvercorp Metals Inc. (SVM) is a mining company mainly dealing in the acquisition, exploration, development, and mining of precious metals and base metal properties. The Toronto-based company primarily explores for gold, silver, zinc, and lead within properties located in the People's Republic of China.
SVM has rallied 36.5% this year, but the stock has pulled back about 9.8% from its highs.
Silvercorp Metals reported its fiscal Q3 results in February, with revenue of $58.5 million topping expectations. Net income decreased to $10.5 million, or $0.06 per share, from last year’s $11.9 million, or $0.07 per share, but arrived in line with Wall Street's expectations.
The company ended the quarter with a robust cash balance of $198.3 million, up 5% year over year.
Silvercorp Metal is set to release its Q4 results on May 23, and investors might get some color on the newly announced all-stock buyout of Adventus Mining, announced in late April. The deal is expected to be accretive on a net asset value per share basis.
Is SVM Stock a Buy?
SVM is a top pick with analysts, who have a consensus “Strong Buy” rating. There are a total of 5 analysts tracking the stock, and 4 have a “Strong Buy” rating, compared to one “Moderate Buy” call for the stock.
The mean price target for SVM is $5.26, indicating a healthy upside potential of 46.5% from current levels.
On the date of publication, Ruchi Gupta did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
