4 Top Discounted Mining Stocks to Consider This Weekend

Fortuna Silver Mines Inc. (TSX:FVI)(NYSE:FSM) and three other TSX index mining stocks could be value opportunities for upside investors.

| More on:

With share prices falling in some of the best mining stocks on the TSX index, capital gains investors have some bargains to choose from at the moment. But what kinds of growth rates in terms of annual earnings can would-be investors expect from discounted mining stocks such as these? With gold and silver potentially set to have a good 2019, value opportunities abound for traders looking for upside from the Canadian precious metals and mining industry.

Guyana Goldfields (TSX:GUY)

Discounted by more than 50% when comparing net present value with its future worth in terms of cash flow, Guyana Goldfields is trading at half its book price with a market-beating P/E of 9.3 times earnings. But do these low multiples signify an attractive undervaluation, or are they in fact symptomatic of a value trap?

Down 9.37% in the last five days, Guyana Goldfields does seem on the face of it to be a value opportunity for TSX index mining investors. It’s sturdy stock, after all, with a one-year past earnings growth of 30.7% and five-year average rate of 47.7% showcasing a decent track record. With a low debt level of 11.5% of net worth, it can also boast a clean balance sheet.

Alacer Gold (TSX:ASR)

Down 4.12% in the last 24 hours at the time of writing, Alacer Gold is deeply discounted against future cash flow values by 35%, and trading near its book value with a P/B ratio of 1.1%; however, a high P/E of 53.7 times earnings shows overvaluation in terms of income. Drawing on a further market fundamental for clarity, a PEG of 2.7% indicates overvaluation in terms of expected growth.

Negative one-year and five-year average past earnings growth rates may turn off potential buyers, though Alacer Gold has a decent balance sheet, with a debt that’s below the threshold of concern, while a 19.6% expected annual growth in earnings should interest upside investors.

Fortuna Silver Mines (TSX:FVI)(NYSE:FSM)

Trading at book price, this “gold standard” TSX index mining stock is also deeply discounted by the same metric as the previous tickers, but with a P/E of 9.3 times earnings. Down 0.8% in the last five days, it’s fairly steady at the moment, while its balance sheet and track record can’t be faulted, with the latter characteristic typified by a one-year past earnings growth rate of 70.4% and half-decadal rate of 61.5%.

Silvercorp Metals (TSX:SVM)(NYSE:SVM)

Up 2.06% in the last five days, Silvercorp Metals is the past week’s star mining stock. Down 17.6%, its negative one-year past earnings rate is mitigated by a positive five-year average past earnings growth of 53%. Another squeaky clean ticker, Silvercorp Metals is attractively valued (see a P/E of 11.2 times earnings and P/B of 1.4 times book), while a small dividend yield of 0.94%, matched with a 6.3% expected earnings growth, offer a sweetener to longer term investors.

The bottom line

One of the TSX index miners above stands out here: Guayana Goldfields is looking at a 16.5% expected annual growth in earnings (which is significant when compared with Fortuna Silver Mines’ expected 9.8% downturn in earnings, for example). Silvercorp Metals is notable for its potential for mixing regular passive income with the potential for capital gains.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Victoria Hetherington has no position in any of the stocks mentioned.

More on Stocks for Beginners

a person looks out a window into a cityscape
Dividend Stocks

1 Marvellous Canadian Dividend Stock Down 11% to Buy and Hold Immediately

Buying up this dividend stock while it's down isn't just a smart move, it could make you even more passive…

Read more »

Blocks conceptualizing the Registered Retirement Savings Plan
Dividend Stocks

CPP at 70: Is it Enough if Invested in an RRSP?

Even if you wait to take out CPP at 70, it's simply not going to cut it during retirement. Which…

Read more »

worry concern
Stocks for Beginners

3 Top Red Flags the CRA Watches for Every Single TFSA Holder

The TFSA is perhaps the best tool for creating extra income. However, don't fall for these CRA traps when investing!

Read more »

Data center woman holding laptop
Dividend Stocks

Buy 5,144 Shares of This Top Dividend Stock for $300/Month in Passive Income

Pick up the right dividend stock, and investors can look forward to high passive income each and every month.

Read more »

protect, safe, trust
Stocks for Beginners

2 Safe Canadian Stocks for Cautious Investors

Without taking unnecessary risks, cautious investors in Canada can still build a resilient portfolio by focusing on safe stocks like…

Read more »

A glass jar resting on its side with Canadian banknotes and change inside.
Stocks for Beginners

How to Grow Your TFSA Well Past the Average

Need to catch up quick with your TFSA? Consider some regular contributions to this top bank stock, as well as…

Read more »

An investor uses a tablet
Stocks for Beginners

Prediction: Here Are the Most Promising Canadian Stocks for 2025

Here are three top Canadian stocks that could deliver solid returns on your investments in 2025.

Read more »

Top TSX Stocks

A 6 Percent Dividend Yield Today! But Here’s Why I’m Buying This TSX Stock for the Long Term

Want a great stock to buy? You will regret not buying this TSX stock and its decades of growth and…

Read more »