By Ann McQueen
In today’s uncertain global economic times, investors have sought safety and security in precious metals, and silver in particular has a lot to offer. We’ve identified four silver stocks that we consider strong choices for investors considering this haven.
Silver Wheaton Corp. (SLW) – This large-cap Canadian company with market capitalization of $13.78 billion offers a dividend yield of 0.3 percent and earnings per share of $1.39. Its price-to-earnings ratio is 28.02. Its competitor Coeur d’Alene Mines Corporation (CDE) does not pay a dividend. Its earnings per share is $0.26. With a price-to-earnings ratio of 108.01, CDE does not shine. SLW’s quarterly revenue growth is strong at 105 percent, but CDE’s is even stronger at 128.8 percent. SWL’s gross margin of 86.09 percent appears more profitable than CDE’s 55.92 percent. SLW’s return on equity is 23.02 percent, whereas CDE’s is only 1.09 percent. SLW’s debt-to-equity ratio is 3.8, and CDE’s is higher at 9.12. CDE is a barely a large cap company with market capitalization of $2.54 billion. On August 29, this Seeking Alpha article listed SLW among its “5 Money-Making Stocks Trading Under $40.” Another article looks at what silver’s trading pattern means to investors.
Pan American Silver Corp. (PAAS) offers a dividend yield of only 0.3 percent and earnings per share of $2.77. Its price-to-earnings ratio is 11.86. It is trading near the middle of its 52-week range of $25.65 to $43.06. In addition to the other companies reviewed above and below, competitors include BHP Billiton Ltd. (BHP), Grupo Mexico SA de CV (OTCPK:GMBXF) and Compania de Minas Buenaventura SA (BVN). PAAS fares well. It is a mid cap company, while the others are large cap. BHP’s dividend yield is 2.7 percent, and BVN’s dividend yield is 1.3 percent. PAAS boasts the highest quarterly revenue growth of 54 percent, BVN is second-highest at 52.3 percent, GMBXF.PK is third with 37.3 percent, and BHP is fourth with 34.3 percent. Of the four, PAAS is second-most profitable with a gross margin of 58.71 percent. BVN is first with 67.05 percent, GMBXF.PK is third with 52.77 percent, and BHP is the least profitable with 45.88 percent. BHP’s earnings per share of $8.54 is the highest. BVN’s $3.22 is second, and GMBXF.PK’s $0.26 is the lowest. As for price-to-earnings ratio, BVN is the most expensive at 141.40, GMBXF.PK is the second most expensive at 12.17, and BHP is the least expensive at 9.62.
A couple of other key statistics for PAAS include its return on equity of 20.06 percent and its debt-to-equity ratio of only 2.16. GMBXF.PK reports return on equity of 27.73 percent and a debt-to-equity ratio of 40.75. BHP’s return on equity looks strong at 44.72 percent, and its debt-to-equity ratio is 27.54. BVN return on equity is 32.31 percent, and its debt-to-equity ratio is low at 2.56.
This August 19 article paints an overall picture of silver and discusses this Canadian mining company. One on the Motley Fool compares PAAS to SLW, in favor of SLW; another offers a different look at silver’s demand and notes that U.S. Rep. Ron Paul, R-Texas, owns shares of PAAS. This article focuses on tanking silver and gold company stocks. Late in August, PAAS announced that it would buy back up to 5 percent of its outstanding shares on the open market because its directors feel the price is undervalued.
Hecla Mining Company (HL) – This mid cap mining company offers earnings per share of $0.28. Its price-to-earnings ratio is 27.37. Last week, its board of directors announced that it would pay a dividend on its preferred stock. One of HL’s competitors, PAAS, is discussed above. Another is Barrick Gold Corporation (ABX), which offers a dividend yield of 0.9 percent, earnings per share of $3.83, and a price-to-earnings ratio of 13.91. Barrick is a much larger company with market capitalization of $53.10 billion. HL’s quarterly revenue growth is a little higher at 33 percent than ABX’s 29.7 percent. HL’s gross margin is also a little higher at 65.2 percent. ABX’s gross margin is 60.11 percent. HL’s return on equity is 8.7 percent, compared to ABX’s 18.39 percent. A key difference arises when comparing debt-to-equity ratios. HL boasts an incredibly low 0.72, but ABX’s is 56.77. One Seeking Alpha article considers HL a “shining star”; HL’s 3.8 percent gain last Friday is discussed here.
Silver Standard Resources Inc. (SSRI) – This mid to large cap company with market capitalization of $2.45 billion does not offer a dividend yield, but boasts earnings per share of $5.17 and a price-to-earnings ratio of 5.89. Its quarterly revenue growth at 235.5 percent far exceeds its competitors BHP and GMBXF.PK listed above at 34.3 percent and 37.3 percent, respectively. SSRI’s gross margin of 52.35 percent holds up to the competition, also mentioned above. We like its 50.85 percent return on equity and its debt-to-equity ratio of 11.97 too. Read more about SSRI’s noteworthy gains on Friday.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.