While it is understandable for investors to get caught up with the recent rise in gold prices and its positive effect on gold miners, it's worth shopping around in other precious metal markets for potential buying opportunities.
Silver prices are up 17.19% so far in 2019, rising from $15.75 per ounce to a high of $19.57 per ounce. In comparison, gold prices are up 19.7% over the same time period, which makes sense considering that gold and silver tend to have a direct correlation in price. Just recently, analysts at Citigroup said that gold could easily reach a new record at $2,000 per ounce within the next 12 to 24 months and other precious metals like silver are expected to follow suit.
Such an increase is great news for silver miners, which would see increased revenues, profit margins, and rising stock prices. If you are considering investing in this market, then here are a few of the top U.S. silver mining stocks to consider.
1. Pan American Silver
One of the world's dominant silver miners is Pan American Silver (NASDAQ:PAAS). Pan American Silver's stock has risen by 67% from hitting its low in late-May but remains up just 17.6% over the course of 2019. While this isn't the same explosive growth seen by other silver or even gold mining stocks, Pan American Silver makes up for it by being one of the most fundamentally sound companies in the sector.
Its recent Q2 financial figures demonstrated strong performance across all key metrics. Revenues of $282.9 million were up 21.6% compared to the previous quarter while operating earnings have increased by 210% to $36.14 million. Output has risen moderately, up 5.6% since Q1 2019 while All-in Sustaining Costs (AISC), the main figure that represents overall production costs, decreased by 1.5% of the same period. These figures are all impressive improvements for a mere three-month time frame, putting Pan American Silver in an excellent financial position.
Pan American also made several major project acquisitions recently that could ramp up production output as silver prices continue to rise. The most noteworthy is the Escobal project, one of the largest primary silver deposits in the world which has had its operations halted since January 2017. Estimates put the Escobal project's AISC near $10 per ounce, well below current silver prices for a significant profit margin, while the site still has an impressive 121 million ounces of silver reserves available to be extracted.
2. First Majestic Silver
With a market cap of $2.67 billion, shares of First Majestic Silver (NYSE:AG) have seen an impressive rise in 2019, up 60.5% so far in 2019. In comparison to industry benchmarks such as the iShare Silver Trust ETF, which have risen by only 16.4% so far this year, First Majestic Silver has been one of the best performing silver stocks listed on a U.S. exchange.
The strength of First Majestic Silver comes down to the fact that it has been improving its margins significantly. The company's overall AISC has fallen from $14.95 in 2018 to just $12.91 per payable silver ounce according to last quarters financial results. This 13.7% reduction in AISC represents a massive improvement in cost reductions for the company. At the same time, silver production has grown as well. Projections for full-year 2019 come in between 14.2 million ounces and 15.8 million ounces, a significant increase from the 11.7 million reported in 2018.
While many other silver miners have seen their debt levels rise over the past year, First Majestic Silver boasts a modest $51 million in net debt, an impressively low figure for a company of its size.
3. Fortuna Silver
In contrast to the other two large-cap silver miners mentioned above, mid-cap Fortuna Silver (NYSE:FSM) shares have remained flat so far this year. Up 26.8% from its mid-July low but down 4.9% so far in the year, Fortuna Silver does have a few interesting things going for it.
Fortuna Silver has moved away from strictly mining silver, adding a fair amount of gold production to its mix. Approximately 52% of sales come from silver while 27% are from gold. While most silver miners have a little bit of gold output on the side, Fortuna is a bit more focused on gold than other companies of similar size, a positive sign since gold has outperformed silver and likely will continue to do so in the future.
Fortuna's main projects are based in Mexico and Peru, but the big wild card for Fortuna is its Argentina-based development Lindero project. Once the facility is completed and fully operational, which the company expects will be sometime Q3 2019, Fortuna expects to see its company-wide gold output more than triple.
There is a strong upside case to be made for Fortuna now that the Lindero project is ramping up, but on the other hand, Fortuna's recent financial figures have been mixed. According to the company's Q2 earnings, sales and net income both fell by 8% in comparison to last year, although this was still slightly ahead of analysts' consensus. The main highlight has been its free cash flow from ongoing operations, which has increased by 69% since Q2 2018.
Fortuna Silver might not be as strong fundamentally in comparison to Pan American or First Majestic, it has strong short-to-mid-term upside potential thanks to its new Lindero mine coming online this quarter.