Why Endeavour Silver, AuRico Gold, and Fred's Soared Today

After celebrating new all-time record highs for the Dow yesterday, the stock market fell sharply Thursday, as geopolitical issues once again reared their ugly head, and spoiled otherwise positive sentiment from earnings season and the overall state of the U.S. economy. A Malaysian jet crashed earlier today in the eastern part of Ukraine, and world leaders were reluctant to speculate on whether the cause was an accident, or a deliberate attack on the part of groups involved in the conflict in the region. Despite the pressure on the overall market, some stocks still gained, with Endeavour Silver (NYSE: EXK  ) , AuRico Gold (NYSE: AUQ  ) , and Fred's (NASDAQ: FRED  ) climbing Thursday.


Source: Endeavour Silver.

Endeavour Silver climbed 7% on a good day for silver stocks generally, as conflict around the world has tended to support precious-metals prices in the past, and did so again today. Endeavour, in particular, tends to move more sharply than other mining stocks when silver prices move, given its relatively small size and its cost structure. Endeavour has climbed to its best levels in more than a year, with the company reporting last week that its second-quarter silver production was up 9% from the year-ago quarter, even though gold production dropped by almost 25%. With plans to turn its effort more toward the exploratory side of the business, Endeavour appears to be pulling out of the decline that last year's plunge in silver prices caused. The stock's prospects look attractive if you believe that silver prices will hold onto their gains and continue to advance from current levels.

Image sources: Wikimedia Commons; Creative Commons/Armin Kubelbeck.

Along the same lines, AuRico Gold gained 6.5% after announcing preliminary second-quarter production results last night. Record production at the company's key Young-Davidson mine helped send overall gold production up 17%. The stock managed to overcome a couple of negative points, including the fact that production at its El Chanate mine declined, and overall cash costs jumped by almost $150 per ounce to climb above $800 in the most-recent quarter. Nevertheless, with costs expected to decline through the remainder of the year, and with prospects at Young-Davidson continuing to look favorable, AuRico has the potential for even further gains if the gold market cooperates.

Finally, retailer Fred's rose 9% after reports that private-equity firm Sycamore Partners is looking to acquire the company. Sources for the Reuters report said that no deal is imminent, and that the parties might end up backing away from a deal; but Fred's has been looking at a potential sale or other strategic options for months now. With weak results, Fred's has suffered from competition from dollar-store discounters, but Sycamore has a history of working with struggling companies in the apparel area, and could end up helping the business recover -- even if shareholders only end up with a taste of the resulting profits before the company goes private.

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