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 Osisko Gold Royalties Ltd (NYSE:OR) 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).
A golden nugget illuminated under direct lighting, hinting at the value of precious metals.
Osisko Gold Royalties Ltd (NYSE:OR)
Average Upside Potential: 18.3%
Number of Hedge Fund Holders: 17
Osisko Gold Royalties Ltd (NYSE:OR) is engaged in acquiring and managing precious metal and other royalties, streams, and other interests in Canada and internationally. It mainly explores precious metals, such as gold, silver, diamond, and others. The company owns a 100% silver stream on the Mantos Blancos mine.
Wall Street analysts are optimistic about Osisko Gold Royalties Ltd (NYSE:OR)’s 100% ownership of silver stream on the Mantos Blancos mine, through Osisko Bermuda. Under this stream, Osisko Bermuda is expected to receive refined silver equal to 100% of the payable silver from the Mantos Blancos mine until 19.3 million ounces have been delivered (As of September 30, 2024, 6.2 million ounces have been delivered), after which the stream percentage will be 40%.
With respect to the guidance of 2024, Mantos Blancos remains focused on reliably achieving the installed capacity of 20,000 tpd. Osisko Gold Royalties Ltd (NYSE:OR) continues to execute a plan to address plant stability, including improved maintenance and optimization of the concentrator and tailings system.
Also, Osisko Gold Royalties Ltd (NYSE:OR) owns a silver stream referenced to 87.5% of the Gibraltar copper mine’s production, held by Gibraltar Mines Ltd and located in British Columbia, Canada. The stream was amended, which increased the refined silver to be delivered from 75% to 87.5% of the payable silver production. Once a total of 6.3 million ounces of silver have been delivered, the refined silver to be delivered is expected to be reduced to 30.625% of the payable silver produced at Gibraltar thereafter. As of September 30, 2024, 1.4 million ounces of silver were delivered under the stream agreement.
Jefferies Financial Group upped its price objective on the shares of Osisko Gold Royalties Ltd (NYSE:OR) from $19.00 to $22.00, giving a “Buy” rating on 4th October. Heartland Advisors, an investment management company, released its Q3 2024 investor letter. Here is what the fund said:
“By contrast, Osisko Gold Royalties Ltd (NYSE:OR) is a successful holding which we exited this year because its grid score deteriorated. As interest in gold has grown, shares of the company, which acquires and manages precious metal royalties worldwide, appreciated substantially. However, production difficulties at one of their key producing mines surfaced, thus reducing our estimates of earnings and cash flows. Together these increased the risk while lessening the reward potential for Osisko, causing our valuation of the company to fall, and putting it at the bottom of the mining stocks in our portfolio. With a price to cash flow ratio of close to 20X and the grid score deteriorating to only 5 of 10, we believed there were better values elsewhere.”
Overall, OR ranks 6th on our list of best silver mining stocks to buy right now. While we acknowledge the potential of OR 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 OR 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.
