The best silver stocks are top-of-mind currently. That’s because commodity classes, especially metals like silver and gold, are considered safe havens in times of economic turmoil. Investors consider precious metals as stores of value that are more reliable than fiat currencies. This is particularly true when inflation spirals out of control, as is currently the case.
June inflation reached 9.1%, which means precious metals should see renewed interest from investors. That said, silver prices haven’t moved in lockstep with Federal Reserve rate hikes and interest figures.
But silver also has multiple industrial applications as well. So, it isn’t simply valuable as a precious metal and risk hedge. Let’s look at some of the best silver stocks to buy now.
Best Silver Stocks: Fortuna Silver Mines (FSM)
Fortuna Silver Mines (NYSE:FSM) is definitely a risky, speculative stock. It trades well within penny stock territory at less than $3 per share. That risk comes with significant upside of roughly 59% built into its target price.
Investing in Fortuna Silver Mines is a bet that its field operations across Argentina, Burkina Faso, Côte d’Ivoire, Mexico and Peru will continue to improve. So far, they have shown improvement with revenue increasing more than 54% in the most recent quarter.
Unfortunately, Fortuna Silver Mines didn’t see a large spike in net income despite the surge in revenues. In fact, net income only increased from $26.4 million to $27 million in the quarter. But that also means the company has been profitable for quite some time. That alone is a reason for bullishness.
The company is already mining more metal and making greater sales. Once costs normalize, FSM stock should rise. That’s where all that upside will come into play.
First Majestic Silver (AG)
First Majestic Silver (NYSE:AG) is a steady stock worth considering. The Vancouver firm released earnings on Aug. 4 that reinforce that notion.
The company is steadily improving despite the tough operating environment. Revenues increased a modest 3%, reaching $159.4 million in the quarter. Silver production increased by 20%, but it should be noted that the firm also mines gold.
Per-ton production costs increased 9% in the quarter while silver prices declined 12% during the same period. The combination led to a particularly tough quarter in which EPS dropped from 5 cents to a loss of 2 cents.
That said, AG share prices didn’t react much to the news. That suggests investors are mostly impressed with the company’s steadily increasing revenue generation and silver production.
The company is looking to cost reduction measures to right its ship. Additionally, it wants to replicate healthy margins across its three Mexico operations and its single U.S. location in Nevada. That, in concert with the normalization of costs, should lead to increasing share prices.
Hecla Mining Co. (HL)
Hecla Mining (NYSE:HL) is another penny stock worth considering in silver production. The Idaho-based firm also produces gold and saw a 10% increase in overall production on a sequential basis.
Silver production increased in the quarter, but the firm saw revenue decrease on a year-over-year basis. The good news is the company’s gold production balanced out silver production costs. The company reported EBITDA figures of $70.5 million in the quarter.
The company acquired and is in the process of closing a deal for a high-grade silver mining operation in the Yukon during the quarter. The deal potentially makes Hecla the largest silver producer in Canada moving forward.
The firm’s other three mines all produce positive free cash flow. HL stock also exceeded EPS guidance this quarter, a strong sign given the difficult operating environment.
On Penny Stocks and Low-Volume Stocks: With only the rarest exceptions, InvestorPlace does not publish commentary about companies that have a market cap of less than $100 million or trade less than 100,000 shares each day. That’s because these “penny stocks” are frequently the playground for scam artists and market manipulators. If we ever do publish commentary on a low-volume stock that may be affected by our commentary, we demand that InvestorPlace.com’s writers disclose this fact and warn readers of the risks.
On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.