Silver is a highly versatile metal with a wide range of uses. In addition to its use in jewelry and silverware, this precious metal has wide utility in various industrial and manufacturing processes.
As the global economy continues its recovery, the demand for silver in industries is expected to grow. According to the Silver Institute, global silver demand is expected to rise 8% to achieve a record 1.11 billion ounces this year. The need for silver is expected to be driven by silver industrial fabrication, investments in silver bars and bullion coins, and its use in jewelry and silverware. Former director of the United States Mint and senior IRA strategist for gold and silver dealer U.S. Money Reserve, Edmund Moy, said “a compelling argument can be made that 2022 will be a good year for silver.”
Given this backdrop, we think it could be wise to bet on silver mining stocks First Majestic Silver Corp. (AG), MAG Silver Corp. (MAG), and Fortuna Silver Mines Inc. (FSM). Wall Street analysts expect these stocks to gain more than 15% in price in the near term.
First Majestic Silver Corp. (AG)
Headquartered in Vancouver, Canada, AG engages in acquiring, exploring, developing, and producing mineral properties, focusing on silver and gold production in Mexico and the United States. The company owns and operates the San Dimas Silver/Gold Mine, the Jerritt Canyon Gold Mine, the Santa Elena Silver/Gold Mine, and the La Encantada Silver Mine.
On Jan. 18, 2022, AG announced that its production in the fourth quarter was a record 8.60 million silver equivalent ounces, consisting of 3.40 million silver ounces and 67,411 gold ounces, representing a 17% increase sequentially. The company also said that it will produce between 32.20 million -35.80 million silver equivalent ounces in 2022, capitalizing on the high demand for silver expected this year.
AG’s revenues for nine months ended Sept. 30, 2021, increased 53.6% year-over-year to $379.24 million. The company’s operating earnings increased 95.3% year-over-year to $20.93 million. Also, its net loss narrowed 91.6% year-over-year to $0.95 million.
Analysts expect AG’s EPS and revenue for its fiscal 2022 to increase 140% and 27.5% year-over-year to $0.36 and $731.33 million. Over the past year, the stock declined 42% in price to close its last trading session at $11.40. However, Wall Street analysts expect the stock to hit $13.60 in the near term, indicating a potential 19.3% upside.
MAG Silver Corp. (MAG)
Headquartered in Vancouver, Canada, MAG is a development and exploration company. It is focused on acquiring, exploring, and developing high-grade, district-scale projects located primarily in the Americas. The company’s projects include Juanicipio Property and Cinco De Mayo Property.
MAG's net loss for nine months ended Sept. 30, 2021, narrowed 80.7% year-over-year to $2.63 million. The company’s loss per share narrowed to $0.03, compared to $0.15 in the year-ago period. Also, its income from equity investments in Juanicipio came in at $6.90 million, compared to a $3.37 million loss in the year-ago period.
For the quarter ended June 30, 2022, MAG’s EPS is expected to increase 122.2% year-over-year to $0.07. Its revenue for its fiscal year 2022 is expected to increase 36,806.1% year-over-year to $121.79 million. Over the past year, the stock has lost 26.6% to close the last trading session at $15.75. However, Wall Street analysts expect the stock to hit $22.31 in the near term, indicating a potential upside of 41.6%.
Fortuna Silver Mines Inc. (FSM)
Headquartered in Vancouver, Canada, FSM is a precious metals mining company operating in Argentina, Burkina Faso, Mexico, and Peru. The company is engaged primarily in producing silver and gold minerals. The company’s operating mines and projects include San Jose Mine, Caylloma Mine, Lindero Mine, and Yaramoko Mine.
On Jan. 18, 2022, FSM announced that it had produced 207,192 ounces of gold and 7,498,701 ounces of silver or 305,859 equivalent gold ounces in 2021. The company guided gold production of between 244 to 280 thousand ounces and silver production of between 6.20 to 6.90 million ounces in 2022. Its gold equivalent production is expected to come in at 326 - 371 thousand ounces.
FSM’s sales for the nine months ended Sept. 30, 2021, increased 128.5% year-over-year to $400.91 million. The company’s net income increased 1,357.6% year-over-year to $42.79 million. Also, its EPS came in at $0.19, representing an 850% year-over-year increase.
Analysts expect FSM’s EPS and revenue for its fiscal year 2022 to increase 4.3% and 19.3%, respectively, year-over-year to $0.49 and $710.04 million. Over the past year, the stock has declined 56.1% in price to close the last trading session at $3.54. However, Wall Street analysts expect the stock to hit $4.84 in the near term, indicating a potential upside of 36.7%.
AG shares were trading at $11.52 per share on Wednesday morning, up $0.12 (+1.05%). Year-to-date, AG has gained 3.69%, versus a -8.85% rise in the benchmark S&P 500 index during the same period.
About the Author: Dipanjan Banchur
Since he was in grade school, Dipanjan was interested in the stock market. This led to him obtaining a master’s degree in Finance and Accounting. Currently, as an investment analyst and financial journalist, Dipanjan has a strong interest in reading and analyzing emerging trends in financial markets.
3 Mining Stocks to Buy as Silver Demand is Expected to Rise to a Record High in 2022 StockNews.com
