According to Silver Institute’s report, The Outlook for Silver Industrial Demand, the demand for industrial silver is expected to reach a new high in 2014 that will account for more than 57% of total silver fabrication. Silver plays a vital part in various consumer and industrial product lines that includes televisions, photovoltaics, automobiles, and computers. With the U.S. economy gradually picking up, strong growth in the automobile sector, and the revival of housing and construction industry; silver’s price is all set to move up once again. As the precious metal is still hovering around $30, it’s high time to buy silver stocks. I have filtered three of the top stocks in the market today, which are expected to beat the industry in the years ahead.
The largest silver streaming company in the world, Silver Wheaton Corp. (USA) (NYSE:SLW) produces more than 24 million ounces of silver per year. Additionally, the company has several purchase agreements which enable it to buy silver at a relatively low cost. At the moment, the company has purchase agreements in South America and Europe. As a result, the company sells more than 20 million ounces of silver mined by other companies. Silver Wheaton’s production capacity is increasing day by day; the company expects to increase its annual silver production to 38 million ounces of silver by 2013.
Silver Wheaton is currently trading at a forward P/E (1yr) of 17.64x and has a dividend yield of 0.80%. It has a strong PEG of 0.32 and a whopping growth rate of almost 74%. Its PEGY of 0.31 shows that it’s a hugely undervalued stock that can give huge returns in the coming years. A mean recommendation of 1.7 on the sell side is a testimony that it’s one of the best stocks in the silver industry. Its mean target price on the sell side is $36.69; hence it has an upside potential of almost 27%. Therefore, I recommend buying Silver Wheaton.
Silvercorp Metals Inc. (USA) (NYSE:SVM)
Silvercorp Metals Inc. (USA) (NYSE:SVM) is a Canadian company focused on acquisition, development, and exploration of silver particularly in Canada and China, and is the largest primary silver producer in China. One of the hallmarks of this silver giant is that it has been producing silver at negative cost per ounce for almost 5 years, which is one of the lowest in the industry. On the 13th of February, 2013, the company released its unaudited operating results for Q313. The company produced 1.52 million ounces of silver in the third quarter with sales of $58.7 million. Cash flow from operations was $27.8 million, or 16 cents per share. One of the highlights of the quarter was that the company reported high grade silver intercepts from its SGX mine and GC project.
Silvercorp is currently trading at a forward P/E (1yr) of 7.73x, depicting the fact that it’s slightly cheaper than its industry peers. It has a high dividend yield of 2.30%, which is the best in the silver industry. With a mean target price of $7.75, Silvercorp appears to be undervalued by a monstrous 82%, and a perfect buy at this stage.
