Listing the top 8 highest-rated silver stocks

If you’re ready to wade into the silver markets, start with the market leaders. Here are the Top 8 silver mining stocks with the highest analyst ratings. A rating of 1 is a “strong buy.” A rating of 5 is a “sell.”

Company Ticker Analyst rating YTD return
Silver Wheaton Corp. SLW 1.9 -28.8%
Mines Management, Inc. MGN 2 -40.4%
Coeur Mining Inc. CDE 2.6 -37%
Silver Standard Resources Inc. SSRI 2.6 48.6%
Endeavour Silver Corp. EXK 2.7 -18%
Fortuna Silver Mines Inc. FSM 2.7 -45.7%
First Majestic Silver Corp. AG 2.8 -23.3%
Hecla Mining Company HL 3 -17.5%

Just one of the stocks above is in positive territory for the year: Silver Standard Resources. And what a year its had leaping up by nearly 50 percent in value.

Here’s the same group of stocks listed by market cap:

Company Ticker Market Cap
Silver Wheaton Corp. SLW $5.5 billion
Hecla Mining Company HL $834 million
Silver Standard Resources Inc. SSRI $582 million
First Majestic Silver Corp. AG $439 million
Coeur Mining Inc. CDE $438 million
Fortuna Silver Mines Inc. FSM $305 million
Endeavour Silver Corp. EXK $173 million
Mines Management, Inc. MGN $8 million

What do analysts like about the top 3 stocks on the list?

1) Silver Wheaton Corp. Hands down, Silver Wheaton has my favorite business model in the precious metals industry. Known as a “silver steaming” company, SLW helps other companies fund the development of future mines in exchange for fixed-cost silver when those mines becomes operational. That’s how SLW currently has fixed costs for silver production of $4.36 per ounce.

2) Mines Management, Inc. This one makes me nervous. Mines Management has been in danger of getting de-listed by the NYSE after its share price faltered. Additionally, the company has posted losses over the past five fiscal years. Mines Management did submit a compliance plan to the NYSE, which was accepted. The company has until the end of 2016 to get compliant. It’ll likely need an infusion of cash to do so. The company’s primary asset – the Montanore silver-copper project located in northwestern Montana – holds 166 million ounces of silver per a Canadian National Instrument (NI) 43-101 that was completed in 2011.

3) Coeur Mining Inc. Analysts currently have an average price target of $6.46 on Coeur Mining. That’s 100 percent more than the stock’s current price of $3.22. Coeur did surprise analysts with a smaller-than-expected loss last quarter. The company lost $0.11 per share vs. the consensus estimate of -$0.22. Revenue hit $166.3 million vs. an estimate of $165. “On average, equities research analysts anticipate that Coeur Mining will post ($0.76) EPS for the current fiscal year” (source).

See related: I’m a bull on Silver Wheaton: Here are 3 reasons why.

Photo credit: JM Griffin and Michael LaTerz.

Top 5 gold and silver mining stocks over the past month

These gold and silver miners appear to be heating up:

  • Solitario Exploration & Royalty (XPL). Four-week return: +18.18%. Solitario recently announced its initial NI 43-101 compliant resource estimate for its high-grade Bongará zinc project in northern Peru. The June 23 report showed “Measured and Indicated Resources totaling approximately 2.8 million tonnes grading 13.0% zinc; 1.9% lead and 19.3 g/t silver; or 15.5% zinc equivalent and Inferred Resources totaling approximately 9.1 million tonnes grading 10.9% zinc, 1.2% lead and 12.2 g/t silver; or 12.4% zinc equivalent.” HC Wainwright initiated coverage on the stock after the news and set a price target of $1.80 on the stock (which is currently trading at $1.56).
  • Minco Gold Corporation (MGH). Four-week return: +14.36%. Minco’s stock popped on news that it’s selling its Gold Bull Mountain Project located in Hunan Province, China for total consideration of RMB 7 million (approximately CDN $1.2 million). The company will now “focus on its core exploration properties in Gansu, China and its continued efforts to dispose of its other non-core assets and to diversify its investment outside China.”
  • Revett Mining Company (RVM). Four-week return: +13.59%. Early in June, Revett Mining announced it’s on schedule to resume full production at its Troy Mine in roughly a year. Permitting for the Rock Creek project in northwest Montana also appears to be going well.
  • Tasman Metals Ltd. (TAS). Four-week return: +12.37%. Notes: Tasman’s Norra Karr project contains one of the world’s largest rare earths deposits. The stock has a $1.75 price target in the next 12 months. Tasman’s currently trading at $1.09.
  • Endeavour Silver Corp (EXK). Four-week return: +11.36%. Endeavour, which operates several silver mines in Mexico, reported strong results earlier this month. Silver production in the Second Quarter, 2014 was up 9% to 1,669,609 ounces.

Why Eric Sprott believes silver prices will triple to $100 an ounce in 2012

Famed investor Eric Sprott of Sprott Asset Management christened gold the investment of the 2000s. Now, he’s loudly proclaiming that this decade will belong to silver.

Famed investor Eric Sprott of Sprott Asset Management christened gold the investment of the 2000s. Now, he’s loudly proclaiming that this decade will belong to silver. His pronouncements are particularly interesting as investors seem to have lost interest in the white metal with prices trending down over the past month.

Of course, silver is still in the green this year (up 7 percent around $30 an ounce), but it’s hard to argue the fact that investors are giving the metal the cold shoulder. The gold-silver ratio is in a strong uptrend (per Seeking Alpha), investors fear that the Federal Reserve could potentially raise interest rates after the presidential election and silver production is on the rise.

Despite all those factors, Sprott believes both gold and silver prices will hit new highs before the end of the year. It’s silver, though, that he thinks will shine the brightest. And he bases some of his reasoning on data from the U.S. Mint:

“They sold as many dollars of silver as they sold dollars of gold last year in terms of gold coins,” Sprott said during an April 20 interview with Goldseek Radio. “That means that essentially, with silver trading at a 50 to one ratio, people bought 50 times the amount of silver as did they gold.”

Sprott’s arguments for new highs in the silver market can be boiled down to three factors: silver price manipulation, a gold-silver ratio that could start shifting back toward silver and demand that’s out-pacing supply.

Indeed, industrial demand will be key to ever higher silver prices.

“Annual production is about 900 million ounces per year, including recycling,” Sprott said (per Frank Curzio at Stockhouse.com). “Industrial usage alone will rise to 660 million ounces by 2015. That leaves only 240 million ounces for coinage, central bank purchases, and investment.”

Sprott’s prediction makes silver mining stocks look particularly attractive. “If Sprott is right and silver prices begin pushing toward $100 an ounce, these companies (Fortuna Silver: FSM, Silver Standard: SSRI, and Endeavor Silver: EXK) could go up several hundred percent from these depressed levels,” Curzio writes.

Economically, things feel like they’re improving in the U.S., but that’s just smoke and mirrors, Sprott argues. “It’s a BS rally,” he told an investor audience in Toronto last month (per Gordon Pape). “We have a system that is breaking down.”

When that systems starts showing cracks, Sprott believes silver prices will start climbing. And they won’t stop until we hit new all-time highs for silver.

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How to identify silver mining takeover targets in 2012

The only reliable way to predict what sorts of junior silver mining stocks will get acquired is by looking at the types of companies that have gotten acquired in the past.

At one point or another, everyone who invests in the junior mining sector thinks about the big buyout their company could get. You’re more likely to pick a dud than a winner, though, and that means it’s all the more important to do your due diligence before plowing into a mining stock.

The only reliable way to predict what sorts of junior silver mining stocks will get acquired is by looking at the types of companies that have gotten acquired in the past. And contrary to a common investor belief, it’s producers (companies that are already pulling silver out of the ground) – not the hotshot young explorers that have uncovered a giant deposit – that tend get acquired.

“As silver miners continue to amass healthly cash treasuries, the sector looks primed for a spate of merger and acquisition activity,” Haywood Securities wrote in a recent research report on silver mining stocks (per Mineweb). “Producer/producer-sector consolidation seems – at the moment – to be a preferred route for silver producers to add to their production growth profiles. For example, Pan American’s recent acquisition of Minefinders, First Majestic’s proposed acquisition of junior producer Silvermex Resources, and Endeavour Silver’s proposed acquisition of AuRico Gold’s El Cubo operating silver-gold mine.”

Haywood’s report almost reads like a manual for identifying mining takeover targets. Look for small and medium-sized producers that control large deposits. Why, after all, would a large mining company take a chance on acquiring a potential deposit when they can go after one that’s going to start generating income from day one?

Knowing what the majors are looking for makes our job easier. Haywood even went on the record with a list of their favorite producers in their report. Among them? Endeavour Silver (NYSE:EXK), Fortuna Silver Mines (NYSE:FSM) and Mandalay Resources (PINK:MNDJF).

A few we’ve identified? Scorpio Mining Corp. (PINK:SMNPF), Golden Minerals Company (AMEX:AUMN) and Great Panther Silver Ltd. (AMEX:GPL). We’ve identified several other silver producers in our new book, The Top 500 Gold and Silver Mining Stocks.

Like this post? On Saturday, we also wrote about Haywood Securities’ fascinating silver price forecasts through 2016.

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