Readers who invested in gold and silver stocks before the interest rate cut on September 18th have gone on to enjoy strong gains almost across the board. Investing in gold and silver are hot topics with a falling USD. While we are possibly at the start of a strong uptrend in precious metals, I urge investors to remain focused on the fundamentals. When everything is going up, it’s easy to lose track of how carefully you pick your investments when the market is down.
I always focus on a core set of statistics. Readers know I like to see cash rich, low-debt, strong ROE, and strong ROA figures.
Hecla’s Yahoo! Finance statistics:
Total Cash: 180.64M
Total Debt: 0
Trailing P/E: 20.36
Forward P/E: 23.18
A strong cash and low debt position means the company is in little danger of going out of business. HL can also choose to use its cash position to fund internal growth or towards outside acquisitions. Price-earnings figures are useful for determining how much an investor is willing to pay for a stock compared to earnings. In the example above, HL investors are willing to pay roughly $20 for every $1 in earnings. Trailing P/E is calculated using current earnings. HL is roughly a $9 stock and the company earned 0.44 during the previous 12 month period. You get a 20 trailing P/E for HL by dividing $9 by $0.44.
Forward P/E uses future earnings estimates. Investors will find it useful to compare P/E statistics with other companies in the same industry to determine if a company maybe under or overvalued. When you are investing in gold or silver stocks make sure to form a list of statistics that you follow.
Investors often forget to consider basic statistics in light of a strong growth opportunity or during periods of industry wide bullish growth. With online investing, readers can instantly check these statistics and access blogs or communities where the story behind a company is discussed. A few minutes a day may uncover a large number of potentially undervalued investments. Since writing my online investing note in Hecla Mining Company, the stock has gone up over 25%.
If you are interested in investing in gold or silver stocks, take a look at the most recent watchlist that I’ve posted.
HL 1-year stock chart