The Motley Fool

Silver Stocks Are Dipping: Is It Time to Buy?

Image source: Getty Images

Silver stocks are down at the moment, with value opportunities opening up in some of the biggest precious metals miners on the TSX. With higher silver prices expected later in the year, here are four bargains for capital gains investors looking for upside.

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

Down 12.45% in the last five days at the time of writing, Fortuna Silver Mines made one of the biggest moves of any silver stock on the TSX index this week. Possibly on its way to a 52-week low, Fortuna Silver Mines is down 1.38% on the day.

A negative one-year past earnings rate is mitigated by a five-year average past growth average of 58.9%, while a low debt level of 13% of net worth indicates a clean balance sheet. Valuation is attractive at the moment, with a P/E of 15.3 times earnings and P/B of 0.9 times book, while an expected 19.5% annual growth in earnings should interest growth investors.

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

Up by leaps and bounds since the last week of January, Silvercorp Metals is currently down 8.26% in the last five days. While this may well not be the case for very long, dips like this are the Holy Grail for precious metals investors bullish on higher silver prices later in 2019.

With a strong record (see a five-year average earnings growth of 53%) and clean balance sheet carrying just 1.1% debt, Silvercorp Metals is a stock to covet. It’s currently undervalued with a 37% discount, P/E of 10.6 times earnings and P/B of 1.3 times book. Meanwhile, Silvercorp Metals investors can find out what it’s like to be in the 1% – a dividend yield of 1%, that is.

Wheaton Precious Metals (TSX:WMP)(NYSE:WMP)

A top silver pure-play stock, Wheaton Precious Metals reduces some of the risk of owning actual mining stocks by way of “streaming” – that is, by acting as an unhedged paper proxy. Down 6.11% in the last five days, this TSX index favourite saw year-on-year returns of 19.3%, and is hot off a one-year past earnings growth of 640.2%.

A healthy stock, Wheaton Precious Metals’ level of debt to net worth has been brought down over the last five years, from 29.6% to the current 24.4% today. While its P/E of 24.5 times earnings is a touch high, this stock trading at twice book does offer a tempting dividend yield of 1.53%.

Pan American Silver (TSX:PAAS)(NASDAQ:PAAS)

With a five-day drop of 6.13%, Pan American Silver pays a dividend yield of 1.08%, and is expecting an annual 37% growth in earnings over the next one to three years. Its P/E of 192.8 times earnings is a bad sign if you’re a value-focused investor looking for the widest possible profit margin, though it’s clean in the balance sheet department and saw a solid five-year average past earnings growth of 59.3%.

The bottom line

Is Pan American Silver the best silver stock on a dip at the moment? Carrying low debt of 1.8% and with a below-market P/B of 1.3 times book, it’s certainly attractive. However, contrast Pan American Silver’s positive outlook and a bit of inside buying with Wheaton Precious Metals’ negative outlook in earnings and some inside selling in the last few months, and the streamer seems to have the edge.

Just Released! 5 Stocks Under $49 (FREE REPORT)

Motley Fool Canada's market-beating team has just released a brand-new FREE report revealing 5 "dirt cheap" stocks that you can buy today for under $49 a share.
Our team thinks these 5 stocks are critically undervalued, but more importantly, could potentially make Canadian investors who act quickly a fortune.
Don't miss out! Simply click the link below to grab your free copy and discover all 5 of these stocks now.

Claim your FREE 5-stock report now!

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. Wheaton Precious Metals is a recommendation of Stock Advisor Canada.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss an important event.

Iain Butler and the Stock Advisor Canada team only publish their new “buy alerts” twice a month, and only to an exclusively small group.

This is your chance to get in early on what could prove to be very special investment advice.

Enter your email address below to get started now, and join the other thousands of Canadians who have already signed up for their chance to get the market-beating advice from Stock Advisor Canada.