During the month of June, the US added just 80,000 jobs - enough to once again initiate conversations regarding Quantitative Easing. That being said, the jobs numbers had a negative effect on gold, which fell $30.50 to settle Friday's trading at $1578.90 per ounce. Silver was also negatively affected, as it declined $0.75, to close at $26.92 per ounce. Even though both precious metals were down, there are three companies that look very attractive at current levels.
Yamana Gold (AUY): Founded in 2003 and based in Toronto, Ontario, Canada, AUY currently trades in a 52-week range of $12.29/share (52-week low) and $18.16/share (52-week high). Analysts expect AUY to earn $0.26/share for the second quarter on revenue of $618.54 million and earn $1.11/share on revenue of $2.52 billion for the year.
Yamana has seen a pretty good run over the last four quarters, beating street estimates by an average of 17.73% over that period. The stock is currently trading in the middle of its 52-week range and is very affordable considering its recent P/E ratio 20.76. The company has also been seen as very profitable, as recently noted by Jeff Williams. Williams stated that the company's 2011 'Quality of Earnings' comes in very good as Operating Cash Flow exceeds Net Income.
The company is also expected to grow pretty nicely over the next few quarters. For the second quarter, the company is expected to grow 4.0%, and for the year, the company is expected to grow 16.7%, which is 1.72 times more than the S&P 500. Potential investors should consider establishing a small- to medium-sized position at current levels and add additional shares as earnings announcements approach.
First Majestic Silver (AG): Founded in 1979, and based in Vancouver, British Columbia Canada, AG currently trades in a 52-week range of $12.12/share (52-week low) and $25.56/share (52-week high). Analysts expect AG to earn $0.30/share for the second quarter on revenue of $62.37 million dollars and earn $1.21/share for the year on revenue of $281.81 million for the year.
First Majestic has missed estimates in each the last two quarters by an average of 13.6% over that period. The stock is currently trading in the middle of its 52-week range and is very affordable considering its recent P/E ratio 15.47. The company recently completed its acquisition of Silvermex Resources.
With regard to the acquisition, First Majestic's CEO Keith Neumeyer said, "The acquisition of Silvermex marks the third public company First Majestic has acquired over the past six years. Our shareholders have experienced great success by supporting our corporate strategy of purchasing undervalued silver properties with a focus of unlocking the true potential of the asset through continuous exploration and development".
With its strategy of acquiring and then further developing undervalued properties be executed fairly well over the last six years, I think a small position at current levels should be established. Additional shares should be acquired as mining performance and earnings announcements are made.
Endeavour Silver (EXK): Founded in 1981, and based in Vancouver, British Columbia Canada, EXK currently trades in a 52-week range of $7.25/share (52-week low) and $13.10/share (52-week high). Analysts expect EXK to earn $0.13/share for the second quarter and earn $0.86/share on revenue of $262.92 billion for the year.
One of the keys to profitability for EXK is the company's continued success in terms of production. The year 2012 would mark the eighth consecutive year that the company has increased production, and both Guanajato and Guanacevi properties have delivered very good results for the company, not to mention the company's recent acquisition of the El Cubo mine, could yield very positive results.
The first quarter demonstrated a bright spot in terms of EPS for the company, as it beat estimates by 37.5%, marking the end of three very disappointing quarters. EXK currently trades at a P/E ratio of 22.48, which makes the stock very attractive at these levels, and also a point where potential investors should establish a small position. The company is also expected to grow pretty nicely over the next few quarters.
For the second quarter, the company is expected to grow 8.3%, and for the year, the company is expected to grow 290.9%, which is 29.98 times more than the S&P 500. Potential investors should consider establishing a small- to medium-sized position at current levels and add additional shares as earnings announcements approach.