Top 5 Silver And Gold Miners In 2012

 |  Includes: ANV, AUQ, CDE, FNV, SLW
by: Plan B Economics

So far, 2012 YTD has been a stellar start for equity markets. Not only are equities up across the board, so are precious metals.

While the gold-miners-to-gold-bullion ratio remains unusually low, some mining stocks have tracked the broader gains. (Note: the gold-miners-to-gold-bullion ratio has been suppressed over the past few years with the growing popularity of ETFs exposed to the price of gold bullion.) Below, I highlight the 5 gold and silver mining stocks (with a market cap over $2b) that have performed best so far this year:

Ticker Company Performance (YTD)
(NYSE:SLW) Silver Wheaton Corp. 23.14%
(NYSE:CDE) Coeur d'Alene Mines Corporation 15.12%
(NYSE:FNV) Franco-Nevada Corporation 15.09%
(NYSEMKT:ANV) Allied Nevada Gold Corp. 14.96%
(NYSE:AUQ) AuRico Gold Inc. 13.98%
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Note: SLW and CDE are silver miners.

While momentum has been strong, that may not necessarily mean these are great investments. However, it does suggest these are higher beta stocks that may outperform in a bull market.

To help readers start the research process, below are some valuation stats for each of these companies:

Ticker P/E P/S P/B
SLW 27.02 18.33 4.99
CDE 34.74 2.54 1.17
FNV 42.1 18.65 2.25
ANV 124.3 21.21 5.71
AUQ 12.01 7.02 1.44
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Based on these metrics, except for AuRico Gold, it appears that these are richly-valued companies. While the street expects forward p/e ratios (below) to decline (implying that forward earnings are expected to rise), the size of the decline suggests that earnings growth forecasts are quite optimistic. These stocks may be priced for perfection, and any change in expectations could cause the prices to drop significantly.

Based on this high-level assessment, as a value investor, I am not compelled to research these companies further. However, there may be fundamental variables that I am missing.

Ticker P/E Forward P/E % Change
SLW 27.02 15.92 41%
CDE 34.74 9.52 73%
FNV 42.1 29.58 30%
ANV 124.3 21.1 83%
AUQ 12.01 7.74 36%
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Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.

Additional disclosure: Data source: Finviz. This is not advice. While Plan B Economics makes every effort to provide high quality information, the information is not guaranteed to be accurate and should not be relied on. Investing involves risk and you could lose all your money. Consult a professional advisor before making any investing decisions.