Shares of silver- and gold-miner Hecla Mining (NYSE:HL) rose an amazing 52% in May, according to data from S&P Global Market Intelligence. The five-month gain between January and May was just about 39%, so the one-month advance in May was basically the big move here for the year. The upside was likely driven by a string of solid news out of the company, in addition to elevated commodity prices.
Hecla reported first-quarter 2021 earnings in early May, and the reading was excellent. For example, sales increased 54% year over year and were the second highest in the company's history. Gross profit of $64.8 million represented an increase of $53.4 million. And earnings per share of $0.03 per share were up from a loss of $0.03 in the same period of the prior year.
Higher commodity prices and strong production both helped support results. The earnings news led to a price-target increase from $6.75 to $7.50 at CIBC.
In addition to that update, Hecla's board made a change to the company's silver-linked dividend policy. The direct effect was to increase the current dividend by 50%, which is a massive dividend hike by any stretch of the imagination. On an ongoing basis, the dividend will be $0.01 higher at each of the silver-price break points that the company has laid out. That likely made a solid earnings update even more pleasing for shareholders.
A week or so after the earning and dividend updates, Hecla released its first-quarter exploration report, which showed notable success and key developments. In fact, it looks like the company's Midas mine could have a longer life than originally thought.
The development success resulted in the company upping its exploration budget for the year by a sizable 33%. Hecla appears to be acting while the iron is hot, given the lofty gold and silver prices in the market today.
When all is said and done, Hecla released a lot of good news in May and the stock reacted accordingly. That said, the stock has moved very far very quickly, likely pricing in a lot of the good news that's out there right now.
Long-term investors should probably tread with caution. In fact, if you're looking at Hecla as a way to hedge against market risk, it might be better to just stick with cash for now. Given the inherent volatility of the precious-metals space, it wouldn't be surprising to see mercurial investors shift to profit-taking mode, given the swift gain in May.