The metals are responding well to the Federal Reserve's comments the other day cementing the view as interest rates are going to remain low for a very long time. I look for this surge to continue based on what happened as result of QE2 (See Chart) which bolstered all commodity stocks significantly. Silver also looks like it could remain strong and is less followed than gold. Two silver miners I like here that look like they have tremendous growth ahead of them are as follows:
5 Year Chart of iShares Silver Trust (SLV)
Pan American Silver (PAAS)
4 reasons PAAS is a bargain at $22 a share:
- The stock is selling at the bottom of its five year valuation range based on P/E, P/B, P/CF and P/S even with strong silver prices.
- The company is experiencing rapid EPS growth. It earned $1.05 in FY2010, is expected to make $1.82 in FY2011 and $2.64 is projected by analysts for earnings in FY2012.
- PAAS has a strong balance sheet with over $4 in net cash on the books and sells for 7 operating cash flow.
- The median analysts' price target on PAAS is $32 a share and Dahlman Rose just initiated the stock as a "buy" two weeks ago.
SilverCorp Metals (SVM)
4 reasons SVM is a buy at under $8 a share:
- The stock looks like it has bottomed and just crossed its 50 day moving average (See Chart).
- The company is showing consistent earnings growth. It made $.38 a share in FY2010, looks to earn $.51 in FY2011 and analysts project it to make $.66 in FY2012.
- The company has a robust balance sheet with over $1 in net cash on the books and is selling at 10 times operating cash flow.
- The mean analysts' price target on SVM is just under $12 a share. Analysts also expect over 60% sales growth in FY2012 and over 30% revenue growth in FY2013.
Disclosure: I have no positions in any stocks mentioned, but may initiate a long position in PAAS over the next 72 hours.