Please ensure Javascript is enabled for purposes of website accessibility

Here's Why Shares of SSR Mining Rose 14% in July

By Scott Levine – Aug 3, 2019 at 2:56PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The rising prices of gold and silver were only two factors helping to propel this mining stock higher last month.

What happened

Adding to their 13% rise through the first half of 2019, shares of SSR Mining (SSRM -2.00%) climbed 13% in July, according to data from S&P Global Market Intelligence. While the increase in the prices of gold and silver contributed to the stock's rise last month, a vote of confidence from Wall Street and the company's report of its second-quarter mineral production represented additional forces contributing to the stock's ascent.

So what

Movements in the stock prices of mining companies are closely correlated with the rise and fall of the market prices of the associated metals. Since SSR Mining's portfolio is most heavily weighted toward gold production -- it accounted for 87% of revenue in 2018 -- the stock's boost is unsurprising considering the price of the metal rose 2.7% last month. Silver also plays a role, representing 12% of revenue in 2018, so the fact that the price of silver rose 8% in July deserves partial credit for the stock's movement.

A businessman points to a laptop with his pen.

Image source: Getty Images.

In addition to the prices of commodities, investors were motivated to pick up shares last month thanks to a positive nod from Wall Street. In late July, Ryan Thompson, an analyst at BMO Capital, raised his price target to $19.50 from $16.50 at BMO Capital, maintaining an outperform rating on the stock, according to Thompson's bullish outlook is especially noteworthy considering the last analyst action on the stock was a downgrade from Scotiabank to sector perform from outperform in early April.

Reporting Q2 mineral production of 98,000 gold equivalent ounces (GEO), SSR Mining suggested to investors that 2019 was shaping up to be more lustrous than expected. Paul Benson, SSR Mining's president and CEO, commented in the report that "Our strong first six months of the year put us in a favorable position to meet or exceed our annual production guidance for the eighth consecutive year." In its Q4 2018 results, SSR Mining forecast 2019 GEO production of 370,000 ounces to 415,000 ounces.

Now what

In light of the upward movements in the prices of commodities and a bullish opinion from Wall Street, the rise in SSR Mining's stock is unsurprising. And while management's suggestion that the company may exceed its mineral production forecast is exciting, those who recognize SSR Mining as a glittering opportunity should place greater significance on the company's Q2 2019 earnings report, which is expected on Aug. 9, to see how costs compare to the unexpectedly high mineral production.

Scott Levine has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

$20.04 (-2.00%) $0.41

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 10/05/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.