Silver prices have been on a tear during the past couple of years, climbing from around $12.25 per ounce in early 2020 to above $22 per ounce by September 2021. Over the same period, silver stocks have likewise experienced significant growth, but many believe there’s far more growth ahead.
Like many other companies, silver mining operations dealt with pandemic-related shutdowns and extended periods of being understaffed. As such, these companies struggled to generate production growth throughout 2020. The bulls argue that as these companies start to reproduce growth, the potential for meaningful gains is ahead.
As with any other sector of the stock market, no two silver companies are the same, and the opportunities and challenges they present are also unique.
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Best Silver Stocks to Buy In 2021
There’s a widespread belief that the price of silver is likely headed higher. There’s a concern that the Federal Reserve’s tapering of economic stimulus enacted during the pandemic will create headwinds for the stock market. Thus safe-haven investments — including precious metals like gold and silver — are becoming a hot topic of conversation.
But what are the best stocks in the category and why? The list below contains some of the top players in the silver game.
1. Pan American Silver Corp (NASDAQ: PAAS)
Among the Largest Silver Mining Companies in the World; Has Generated Significant Growth in Recent Quarters
Founded in 1994, Pan American Silver is one of the largest silver mining companies in the world, boasting a market cap of well over $5 billion. The company is based in Canada and has mining operations in Mexico, Peru, Bolivia, and Argentina.
As with most silver miners and other mining companies, COVID-19 led to a significant reduction in productivity in 2020. In 2019, the company produced 25.9 million ounces of silver followed by just 17.31 million in 2020, but production is starting to pick up.
In the first half of 2021, the company produced 9.1 million ounces of silver. Should the company continue at this rate, it will produce around 18 million ounces in 2021, representing year-over-year growth of nearly 4%. And some analysts believe that to be a low-end estimate.
There are several positive catalysts to look forward to. The company currently has five ongoing exploration projects in the United States, Mexico, Argentina, and Peru, where it has the potential to mine deposits across nearly 1.5 million acres.
The diversified nature of the company’s portfolio, having both operations and exploration opportunities in various countries around the world, offers investors a sense of security as well. After all, just like with a stock portfolio, miners need to diversify their holdings so that if one mine dries up, there are others to move to.
Pan American Silver’s Most Recent Financial Results
The most recent financial report from PAAS was impressive, although it has failed to reach analyst expectations in terms of revenue and earnings in the past two quarters. Nonetheless, there’s a strong argument that analysts have set the bar too high here for some reason.
Take the second quarter for example. During the quarter, revenue came in at $382.13 million, up more than 53% year over year. The earnings performance was even more impressive. During the quarter, net income climbed more than 253% to $70.94 million, while diluted earnings per share climbed 240% to $0.34.
Although analysts may have expected more, the growth experienced in the second quarter, along with the two quarters before it, has been impressive to say the least.
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2. Hecla Mining (NYSE: HL)
Producer of Nearly Half of All U.S. Silver
Founded in 1891, Hecla Mining is one of the longest-lived precious metals mining companies in the world. According to the company’s website, it produces nearly half of all U.S. silver. That’s quite a statement!
The vast majority of the company’s operations are located here at home, with operations in Alaska and Idaho. However, the company also has active mining operations in Quebec, Canada.
As with all successful mining companies, Hecla is constantly looking for new opportunities to expand. At the moment, it’s working to develop two new mines in Montana, both of which are in pre-development stages.
It also has eight active exploration projects in the U.S. and three in Canada. And it appears the company plans on expanding its international efforts into Mexico with the San Sebastian exploration project in Durango.
It is worth mentioning that Hecla doesn’t have a singular focus on silver — it also has several gold mines. This diversification provides a deeper level of stability that has allowed it to consistently pay annual dividends for the past 31 consecutive years.
Hecla Mining’s Most Recent Financial Results
In the second quarter, the company beat analyst expectations in terms of earnings per share, but slightly missed expectations for revenue. Nonetheless, the quarter proved to be a period of significant growth for the company.
During the quarter, revenue grew more than 31% to $217.98 million, while net income was up more than 105%, climbing to $785,000. The company also experienced significant growth in net profit margin, operating income, and cash on hand.
3. Wheaton Precious Metals Corp (NYSE: WPM)
Silver Streaming and Royalty Business That has Produced Significant Gains for Investors
Founded in 2004, Wheaton Precious Metals quickly grew to become one of the largest precious metals companies in the world, boasting a market capitalization of nearly $19 billion. The company was originally formed as a subsidiary of Goldcorp, one of the largest gold producers in the world.
WPM is different from most other silver companies on this list. While the company does have its own mining operations, its core focus is on silver streaming. That means the company’s core operations provide the funding mining companies need to build and operate mines upfront in exchange for a discounted opportunity to purchase all or a portion of the silver produced by the mine.
The business model works great for Wheaton. The company is known for having significant cash flow, generating strong revenues, and enjoying high levels of profitability compared to traditional mining companies.
At the same time, the stock is down around 16% from its price just a year ago. While that may be a turn-off to some investors, to those with bullish opinions of the stock, it points to a serious undervaluation that’s ready to be exploited for profits.
As revenue and profits continue to grow at incredible rates, the company’s undervaluation is likely to be short lived.
Wheaton Precious Metals’ Most Recent Financial Results
In the second quarter, Wheaton produced revenue well ahead of analyst expectations. While earnings came in slightly below projections, the growth was noteworthy.
During the quarter, revenue was up 33.25% to $330.39 million, net income climbed 57% to $166.12 million, and earnings per share was up 60.87%, climbing to $0.37. The company also produced positive results in just about any metric you look at, from net profit margin to operating income, cash on hand, and cost of revenue.
4. First Majestic Silver Corp (NYSE: AG)
Mining Company With Significant Year-over-year Growth That Continues to Expand
First Majestic Silver is a traditional silver mining company that was founded in 2002 in Canada, with the vast majority of its operations in Mexico.
The company currently has control over 12 mines that are either producing or in exploration and development stages. Three of the company’s four producing mines are in Mexico, with the fourth in Nevada. Combined, the company produced a whopping 11.7 million ounces of silver.
While First Majestic Silver is already generating significant production, it has twice the number of exploration and under-development projects in the works as it has producing mines. As these mines under development come to fruition, the company’s production is expected to increase substantially.
Investors are also attracted to a recent move the company made that added diversification to its business model. In mid-2020, First Mining Gold announced that it entered into an agreement with First Majestic Silver, a move that brought First Majestic into the silver-streaming industry.
Between the company’s strong growth prospects on the mining side of the industry and its new-found opportunities on the silver-streaming side, it’s easily one of the strongest silver mining stocks on the market today.
First Majestic Silver’s Most Recent Financial Results
Although all companies on this list experienced compelling growth in the second quarter, the growth produced by First Majestic was jaw-dropping.
Revenue climbed a whopping 342.04% year over year to $154.07 million. Net income and earnings were up 256.49% and 220%, respectively, at $15.6 million and $0.06 per share. Net profit margins, operating income, net change in cash, cash on hand, and cost of revenue all made triple-digit improvements.
5. Endeavour Silver Corp (NYSE: EXK)
A Smaller Silver Company Poised For Growth
Endeavor Silver is one of the smaller companies on this list with a market capitalization of just over $740 million. However, it’s far from the youngest company on the list, being founded in 1981. In its early stages, the company chose to keep itself small and perfect its craft.
However, the company is turning a new leaf and growing rapidly, and investors are starting to take notice.
Like First Majestic, Endeavor is a Canadian company that primarily operates in Mexico. Both of Endeavor’s producing mines are located in Mexico.
The company is also nearing a decision as to whether to develop a third mining operation in Mexico. If they do, this could be a major positive catalyst that sends the stock screaming for the top.
Endeavor is also looking to expand its global footprint. The company’s exploration and development pipeline includes six ongoing projects split evenly between Mexico and Chile.
Although the company is far from the largest silver producer on this list, its prospects for future growth are hard to ignore, as the company currently stands on a tipping point with the opportunity to quickly become a major player in the silver production industry.
Endeavor Silver’s Most Recent Financial Results
In the second quarter, Endeavor Silver beat analyst revenue expectations but missed on earnings per share. Nonetheless, the growth experienced by the company was impressive.
During the quarter, revenue shot up 136.5% to $47.78 million while net income climbed 302.37% to $6.66 million. Earnings per share was also up significantly year over year, climbing 300% to $0.04. The company’s triple-digit growth didn’t stop there, producing more than 100% year-over-year growth in just about every fundamental metric you could think of.
6. Silvercorp Metals (NYSE American: SVM)
A Potentially Undervalued Silver Miner Thanks to Regulatory Concerns in China
Silvercorp Metals is another silver mining company based out of Canada that isn’t mining its homeland. Instead of going south in search of precious metals deposits, the company’s core operations are in China.
In particular, the majority of its mining operations are found in the Ying District, an area in China where the company has mined a whopping 66 million ounces of silver since 2006. Its mines in the district are also strong producers of zinc and lead, of which the company has produced 883 million combined pounds since 2006.
There is one caveat to consider.
The Chinese government has been flexing its muscles for quite some time now, and concerns with massive regulatory changes have led Chinese stocks down the tubes as of late. With the vast majority of Silvercorp’s operations being in China, it has been on a bit of a landslide in the market as of late, falling a whopping 47.64% in the past year.
Although the regulatory conditions in China are concerning, some investors view the declines these conditions have caused as an opportunity. The stock is significantly undervalued compared to its peers by nearly any valuation metric you choose to go by as a result of the geopolitical risk.
The bulls argue that the fears are overblown and the stock’s declines over the past year are unjustified, especially considering the fact that the company has grown both its bottom and top line substantially in the same period.
Sure, this is one of the more risky plays on this list, but with such a significant undervaluation, taking the risk has the potential to result in eye-opening long-run gains.
Silvercorp Metals’ Most Recent Financial Results
Unfortunately, analysts haven’t been following Silvercorp as much as most investors would like to see, but that has picked up in recent quarters, with the first projections from highly trusted analysts coming in in the first quarter. In the most recent quarter, the company beat expectations in terms of both revenue and earnings.
When it comes to revenue, the company experienced 25.94% year-over-year growth. Unfortunately, earnings per share was down more than 22%, coming in at $0.07. But those declines were expected, resulting from exploration and development costs, and actually beat analyst projections.
Operating income improved alongside cash on hand and cost of revenue. All told, the financial results were nothing to shake a stick at.
7. Fortuna Silver Mines Inc (NYSE: FSM)
A Traditional Mining Company Rapidly Expanding its Operations
Fortuna Silver Mines is another traditional mining company with a focus on silver. However, the company’s name may be somewhat deceiving, since it’s also a major producer of gold — this year alone, the company is expecting to produce between 178,000 and 202,000 ounces of gold.
While the company is headquartered in Vancouver, it has no current or planned new projects in Canada. Instead, Fortuna Silver operates mines in Mexico, Argentina, Peru, and North Africa. All told, the company has five active mines and seven exploration projects.
Like many others on this list, growth in production over the past year has been happening at break-neck pace.
However, unlike most others on this list, much of that production growth can be attributed to the opening of a new mine. The company’s Lindero mine, a mining project in Argentina, didn’t produce its first bit of precious metals until October 2020. Since then, the mine has been a stellar producer, adding significant value to both the company’s top and bottom lines.
With efforts to continue expansion through the development of multiple new mines ahead, the growth seen as of late is expected to be maintained for the long run, making Fortuna Silver a stock that’s well worth watching closely.
Fortuna Silver Mines’ Most Recent Financial Results
Fortuna Silver’s is known for its ability to beat analyst earnings expectations, which it did for the third consecutive time in the second quarter. Unfortunately, revenue slightly missed the mark, but when you look at the growth in revenue, there’s not much to be upset about.
During the quarter, revenue climbed a whopping 170.94% to $120.53 million, with earnings per share climbing an eye-opening 400% to $0.09. Net income was also up substantially, climbing nearly 400% to $16.18 million.
As with most others on this list, the company also saw significant growth in operating income, profit margins, and cash on hand.
8. iShares Silver Trust (NYSE Arca: SLV)
Diversified Exposure to the Silver Industry Without the Need to Research Each Individual Company
Finally, if you’d like exposure to silver stocks but don’t have either the interest or time to choose your own list of individual stocks and manage a well-diversified portfolio, there’s another option.
Exchange-traded funds (ETFs) are investment-grade funds that trade on stock exchanges like the Nasdaq and NYSE. These funds pool money from a large group of investors to invest in a wide range of equities based on the fund’s prospectus.
For those interested in investing in silver stocks, one of the most popular ETFs is the iShares Silver Trust. One of the reasons the fund is so popular is the fact that it invests in physical silver. So, by investing in the fund, your portfolio will gain access to silver itself, a known hedge against inflation.
Silver is one of the most popular precious metals in the world, and for a couple of good reasons. Not only is it a great store of value and hedge against inflation, it’s relatively inexpensive by the ounce when compared to metals like gold, platinum, and palladium, making it far more accessible to everyday investors.
As is the case with any industry, when investing in silver stocks, it’s important to remember that not all companies are created equal. Some will grow faster than others and some will be complete duds, leading to losses for investors. It’s important to do your research and get a full understanding of exactly what you’re buying before you dive in.
Disclaimer: The author currently has no positions in any stock mentioned herein nor any intention to hold any positions within the next 72 hours. The views expressed are those of the author of the article and not necessarily those of other members of the Money Crashers team or Money Crashers as a whole. This article was written by Joshua Rodriguez, who shared his honest opinion of the companies mentioned. However, this article should not be viewed as a solicitation to purchase shares in any security and should only be used for entertainment and informational purposes. Investors should consult a financial advisor or do their own due diligence before making any investment decision.