Silver Wheaton Corp. (SLW), Pan American Silver Corp. (PAAS) & Hecla Mining Company (HL): Is There Some Silver Lining in Silver Companies?

This company looks good

Silver Wheaton Corp. (NYSE:SLW) has been one of the Street’s favorite silver companies given that it is the least exposed to cost inflation in this weak market. The financial structure of the company is attractive given that it has only about 1% exposure to industry cost inflation as compared to 10% exposure on average. This protection is due to the unique contracts it holds with its partner mining companies.

Additionally, Silver Wheaton Corp. (NYSE:SLW) has begun to benefit from the ramp-up of production at its various silver-streaming partner companies, and it should receive sales growth from the large Pascua Lama mine, though a new timeline must be developed.

It is interesting to note that Silver Wheaton’s large capitalization has made it the “go to” company to convert byproduct silver into fully valued pure silver exposure. The company’s large capitalization has made the company an attractive partner for mine operators looking for new financing. Silver Wheaton is expected to continue to outperform its peers with gold and silver operations.

Final word

Despite a weak outlook on silver as a commodity, I am bullish on all these three stocks given their individual growth stories and given an indication that they might be witnessing some overselling on the basis of the recent decline in silver prices.

I recommend Pan American Silver Corp. (NASDAQ:PAAS) as a buy given its interesting M&A story. Hecla has a bright future as it diversifies through acquisitions into other metal operations. Silver Wheaton Corp. (NYSE:SLW) is a good company in which to invest given its minimal exposure to industry cost inflation.

The article Is There Some Silver Lining in Silver Companies? originally appeared on Fool.com.

Zain is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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