Finding growth stocks with big upside potential (but also carry dividend yields and trade under $20 per share) isn’t an easy task. Indeed, these sorts of companies don’t really grow on trees, and I had to tweak my screener to find a reasonable list of stocks to choose from for this particular piece.
That said, one company I’ve settled on as a potential buying opportunity in the world of relatively inexpensive growth stocks that pay a dividend) is Silvercorp Metals (TSX: SVM).
Here’s why I think Silvercorp is one stock that could be getting lost in the shuffle, given where precious metals prices are trading right now.
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Strong operating results
As a key producer of gold, silver, lead and zinc (among some other metals and minerals), Silvercorp has established itself as a key global player in the precious metals market, but one which doesn’t get as much attention as it likely deserves.
Some of this may be driven by the company’s relatively small size, trading at a market capitalization of less than $1 billion. That said, the company’s strong production and forward guidance for 4% growth across its core mining segments suggests that the company’s stock price could be undervalued right now.
Silvercorp saw its silver and gold production increase 13% and 3%, respectively, over the course of the past year. This operational improvement has led the company’s stock to trade down to a forward price-to-earnings ratio of just 8.8 times. That’s dirt cheap, even for investors who are banking on a commodity price decline over time.
A value-based pick worth buying
Based on the company’s current valuation, it’s hard to classify Silvercorp as a pure growth stock. I think that’s fair, and it’s clear that the market is pricing in some sort of reversion lower for precious metals prices moving forward.
That said, if we do see market participants continue to acquire more precious metals (and related companies), Silvercorp is one company I think could have big upside from here.
Most investors aren’t going to come to this stock for its 0.7% dividend yield, but that’s a nice cherry on top. In my view, Silvercorp has all the makings of a double-digit total return play over the next decade. Thus, this is a stock I’m going to continue to keep on my watch list and provide updates as they come.
