We recently published a list of 10 Best Silver Mining Stocks to Buy Right Now. In this article, we are going to take a look at where First Majestic Silver Corp. (NYSE:AG) stands against other best silver mining stocks to buy right now.
Silver’s price saw significant appreciation in 2024, with the precious metal up by over 25% on a YTD basis. Market experts believe that the price appreciation stemmed from its expected high industrial demand, primarily from EV manufacturers. Furthermore, they believe that volatility in the dollar index and heightened geopolitical tensions hinted at a robust appetite for precious metals. Silver has now found its applicability in solar panels for renewable energy, in advanced healthcare, in electronics, and several other technologies. This wide adoption provided support to the precious metal in 2024.
Silver Institute mentioned that silver demand for solar power more than doubled over the previous five years, increasing from 74.9 million ounces in 2019 to an expected 232 million ounces by this year’s end.
Where Is Silver Headed?
Geopolitical concerns, including wars in Ukraine and the Middle East, together with China’s latest measures to fuel its economic recovery, supported much of the silver price rally in the recent past. As per industry experts, expectations of strong demand from the renewable energy sector and electronics should be able to offset the uncertainties surrounding economic and monetary policies in the near future.
Apart from its use as an investment, the precious metal has applications in industrial and medical industries, unlike gold. As per Techopedia, only 10% of gold output is used in industrial use, while more than 50% of silver production is used in industrial applications. As per Silver Institute, record industrial demand and recovery in jewelry and silverware are expected to lift demand to 121 billion ounces in 2024, while mine supply is expected to increase by just 1%. Notably, the exchange-traded products remain on track for their first annual inflows in 3 years. This is because silver’s investment appeal has increased off the back of rate-cut expectations, periods of dollar weakness, and falling yields.
The Silver Institute also highlighted that industrial demand should increase by 7% in 2024 to outpace 700Moz for the first time on record.
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Expectations of Increased Silver Production
The Silver Institute highlighted that, in 2024, global mined silver production is expected to rise by 1% YoY to 837Moz. This is expected to be supported by growth from Mexico, Chile, and the US, which should outpace lower output from Peru, Argentina, and China. The production from Mexico is expected to rise by 10Moz, which equates to 5% YoY, to 209Moz. This should stem from increased mill throughput and grade at Pan American Silver’s La Colorada operation, following the upgraded ventilation infrastructure. Also, the output is expected to be fueled by a recovery in production from Newmont’s Peñasquito mine.
In the release dated 12th November, The Silver Institute also mentioned that recycling in 2024 is projected to grow 5% to a 12-year high. This rise should come from price-sensitive sectors, like a spike in Western Silverware scrap. While industrial recycling also edges higher, the growth here is mainly associated with structural factors.
Our Methodology
To list the 10 Best Silver Mining Stocks to Buy Right Now, we used a screener and sifted through several online rankings. After extracting the list of silver mining stocks, we mentioned their upside potential, as of November 18. Finally, the stocks were ranked in ascending order of their hedge fund sentiments, as of Q3 2024.
At Insider Monkey we are obsessed with the stocks that hedge funds pile into. The reason is simple: our research has shown that we can outperform the market by imitating the top stock picks of the best hedge funds. Our quarterly newsletter’s strategy selects 14 small-cap and large-cap stocks every quarter and has returned 275% since May 2014, beating its benchmark by 150 percentage points (see more details here).
An open-pit mine framed by a mountain range, highlighting the company’s vast mining concessions.
First Majestic Silver Corp. (NYSE:AG)
Average Upside Potential: 8.02%
Number of Hedge Fund Holders: 14
First Majestic Silver Corp. (NYSE:AG) is engaged in the acquisition, exploration, development, and production of mineral properties with an emphasis on silver and gold production in North America.
Wall Street analysts are optimistic about First Majestic Silver Corp. (NYSE:AG)’s future growth prospects. This optimism primarily stems from the recent definitive merger agreement with Gatos Silver, Inc., according to which the former will acquire all of the issued and outstanding common shares of the latter. This transaction consolidates 3 world-class, producing silver mining districts in Mexico under 1 banner. Notably, Cerro Los Gatos, San Dimas, and Santa Elena collectively offer the foundation of the diversified, intermediate primary silver producer. Gatos is expected to immediately contribute an annual FCF of ~US$70 million to the combined entity.
The acquisition of Gatos Silver is a compelling and transformative transaction as this enhances First Majestic Silver Corp. (NYSE:AG)’s operating platform via the addition of 70% of Cerro Los Gatos, which is a high-quality, long-life, unencumbered, FCF-generating asset in the mining-friendly state of Chihuahua, Mexico. How will First Majestic Silver Corp. (NYSE:AG)’s shareholders benefit? This acquisition strengthens the expected annual attributable production by ~6 million ounces of silver and 9 million ounces of silver equivalent based on Gatos’ 2024 production guidance. Also, the acquisition will be accretive on all key metrics such as NAV, cash flow, production, and Mineral Reserves.
Moving forward, First Majestic Silver Corp. (NYSE:AG)’s portfolio of high-quality silver mining assets is expected to act as a principal tailwind. As per Wall Street analysts, the shares of the company have an average price target of $7.27.
Overall, AG ranks 7th on our list of best silver mining stocks to buy right now. While we acknowledge the potential of AG as an investment, our conviction lies in the belief that some deeply undervalued AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for a deeply undervalued AI stock that is more promising than AG but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article is originally published at Insider Monkey.
