Endeavor to Catch This Runaway Silver Stock

Investors are like children: They all want to be astronauts when they grow up. I jest, but in truth I'm sure every investor would enjoy seeing any one of their individual stocks launch beyond the stratosphere like a powerful, multistage rocket.

For those who moved to the gold and silver launch pad last September when I forecast a looming takeoff for mining stocks, the ensuing mission is likely to have yielded some exhilarating success. For silver miners in particular, successive booster rockets like the silver manipulation bombshell, Ben Bernanke's QE2, and the Presidents Day silver short squeeze have sustained an impressive upward trajectory.

Shares of recent Big Board inductee First Majestic Silver (NYSE: AG  ) have promptly tripled since mid-September. Pan American Silver's (Nasdaq: PAAS  ) stock has doubled, while that of silver-streaming superstar Silver Wheaton (NYSE: SLW  ) has ascended another 75% atop an epic prior increase of 850% (from a multiyear low notched in November 2008).

Climbing aboard any vehicle moving at supersonic speed is not for the faint of heart, but I believe that quality silver producers will continue to generate long-term outperformance as silver progresses toward my target price of $50 per ounce. In fact, I have predicted that my CAPS pick of the Global X Silver Miners ETF (NYSE: SIL  ) will outperform the S&P 500 by 200%.

Fools seeking to add silver exposure amid silver's momentous ascent may wish to seek relative peace of mind by targeting companies with aggressive growth profiles that erect a foundation of shareholder value beneath these share-price advances. Silver Wheaton, which is targeting 80% production growth over the next five years, offers one prime example. Endeavour Silver (AMEX: EXK  ) , whose stock has advanced more than 150% since I asked Fools to pinpoint a major growth spurt last August, continues to entice shareholders with multiple avenues for growth looking forward.

Following exciting exploration success during 2010, Endeavour has opted to expand capacity at its Guanajuato processing plant by 67%, from 600 to 1,000 tons per day. The company expects to boost production by 12% in 2011 to reach 4.7 million ounces of silver equivalent (including gold), and sees operating profit margin surpassing $18 for each of those ounces (even using a decidedly conservative silver price forecast of $24 per ounce).

This week, the company released a new resource estimate for its most advanced exploration project: the Parral project in Chihuahua State, Mexico. With an indicated resource fast approaching 4 million ounces of recoverable silver equivalent, Parral's prospects are shaping up nicely, and the company will now commission a preliminary economic analysis to help guide future efforts.

Interestingly, Endeavour has also taken on a consultant "to identify and evaluate potential mergers and acquisition opportunities to facilitate Endeavour's future growth." Atop the strength of Endeavour's proven management team, which managed to avoid shareholder dilution effectively through previous rounds of growth, Endeavour's multitiered commitment to generating accretive growth renders this small-cap miner one truly enticing choice of vehicles for riding the silver rocket.

If the never-boring silver mining industry piques your Foolish curiosity, be sure to add these stocks to your free, personalized watchlist and follow all the precious news to come.

Fool contributor Christopher Barker can be found blogging actively and acting Foolishly within the CAPS community under the username TMFSinchiruna. He tweets. He owns shares of Endeavour Silver, Pan American Silver, and Silver Wheaton. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.


Read/Post Comments (7) | Recommend This Article (23)

Comments from our Foolish Readers

Help us keep this a respectfully Foolish area! This is a place for our readers to discuss, debate, and learn more about the Foolish investing topic you read about above. Help us keep it clean and safe. If you believe a comment is abusive or otherwise violates our Fool's Rules, please report it via the Report this Comment Report this Comment icon found on every comment.

  • Report this Comment On March 03, 2011, at 4:08 PM, jesusfreakinco wrote:

    Chris,

    Good stuff. CDE also finally catching a bid and getting the respect it deserves. Great article.

    JFC

  • Report this Comment On March 03, 2011, at 8:18 PM, AgAuMoney wrote:

    Hmm, 2nd comment I've seen today that seems to be pumping CDE with no good reason. I'd like to like CDE, I really would. But has anything really changed since the 10:1 split 2 years ago? Compare with the performance of those mentioned in this article.

  • Report this Comment On March 04, 2011, at 4:53 AM, Kafue wrote:

    "investor would enjoy seeing any one of their individual stocks"

    "investor" is singular and "their" is plural

    "...every investor would enjoy seeing any one of his/her stocks ..."

  • Report this Comment On March 04, 2011, at 7:28 AM, XMFSinchiruna wrote:

    AgAuMoney,

    http://www.fool.com/investing/general/2011/02/28/coeur-launc...

    Kafue,

    http://www.merriam-webster.com/dictionary/they

    The use of they, their, them, and themselves as pronouns of indefinite gender and indefinite number is well established in speech and writing, even in literary and formal contexts. This gives you the option of using the plural pronouns where you think they sound best, and of using the singular pronouns (as he, she, he or she, and their inflected forms) where you think they sound best.

  • Report this Comment On March 04, 2011, at 11:03 AM, griffjj wrote:

    Kafue...Face!

  • Report this Comment On March 07, 2011, at 12:09 PM, drp02 wrote:

    Ironically, "Riding the Silver Rocket" is doctor slang for a proctoscopic exam. This picture of a proctoscope shows why: http://www.bcmamedicalmuseum.org/object/2006.83.1

  • Report this Comment On March 24, 2011, at 3:25 PM, frankinCA wrote:

    Another CDE fan who owns call options and is smiling ca-ching all the why to the bank.

    Mr AgAuMoney, I believe you don't read the WSJ or you would be aware that since then, the stock reverse split, it's price has increased 3 times. It was a good idea was implemented to make their stock more marketable. Now they are reaping the rewards of their efforts and knowledge of the silver mining industry and financial markets.

    Too bad for you, that you were probably so short-sighted and missed a big, big gain. Oh well, you at least get to be critical and make yourself feel better....or maybe it still hurts when you were so skeptical about a good deal.

    You did well in PAAS and SLV, but SLV is not a miner, just buys miner silver or silver by-products like a leach, and has no true interest in mining and exploration, just financing like any bank. I am sure they will get no sweet deals again like they made when silver was $5 an ounce. The miners who almost gave away their silver to get financing or save themselves the trouble of marketing it or ? must be kicking themselves in the you know what now. Are you?

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