May 14th, 2021 | 06:30 CEST
First Majestic Silver, Silver Viper, JinkoSolar: Investors have several irons in the fire
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"[...] Internally we expect the resource to significantly grow the deeper we mine. [...]" Dennis Karp, Executive Chairman, Manuka Resources
First Majestic Silver: This could end tragically
First Majestic Silver's stock is in demand primarily because the Company is one of the few pure silver companies. Often, silver is just a byproduct of commodity producers. First Majestic Silver operates three projects in Mexico and is considered a mid-tier producer with a market capitalization of just over EUR 3 billion. Rising prices for silver are boosting sales at First Majestic, but this is not all good news. Smaller companies, in particular, often have a hard time replacing depleted reserves. Although sales and profits are always a positive sign, commodity companies also gradually lose substance.
For this reason, First Majestic Silver is pushing ahead with some smaller projects and wants to bring them into production. But here, the Company is virtually doomed to success! The remaining life of the existing mines of First Majestic can now be counted almost on the one hand. That makes investors, who want to bet on the future, nervous. The stock is benefiting from the increasing demand from e-mobility and renewable energies. It would be downright tragic if First Majestic Silver could not grow due to a lack of resource replenishment until the markets mentioned have reached their full potential. The stock market also remains skeptical, sending the stock down 9.4% over the past three months.
Silver Viper: Investment pros love this promising silver stock
One solution for First Majestic Silver could be to take a closer look at Canadian silver Company Silver Viper. The latter is also active in Mexico, where it is advancing its La Virginia project. At the beginning of May, Silver Viper published a resource estimate. The key data indicated resources of 154,300 ounces of gold and 6,929,000 ounces of silver and suspected resources of 260,300 ounces of gold and 12,941,300 ounces of silver. Further drilling is expected to define and expand the project more clearly. Silver Viper's work benefits from historical data that can be used to plan closer exploration, which saves costs and speeds up the exploration process.
Despite the progress, the share has been running sideways for several months, having gained only 17.5% over a one-year period. At its peak, the share price was already 50% higher than its current level. That shows that Silver Viper is good for share price momentum, which is appreciated above all by speculative investors. Professional investors are also on board with Silver Viper and hold around 60% of the shares. So anyone investing here as a private investor is in good company. Silver Viper is an exciting stock given the wide range of applications for silver in the fields of renewable energy, electromobility and electrical engineering and the growing pressure on larger producers to increase their reserves.
JinkoSolar: No bubble, but caution is advised
One company that also relies on silver is JinkoSolar. The Chinese produce and sell solar cells, solar modules and mounting systems, thus offering a lot from a single source. Through a subsidiary, JinkoSolar also operates its own solar parks. This is clever, as the Company is its own customer and knows how to take advantage of production fluctuations or overcapacities. The share has already gained around 80% on a one-year horizon. In the last three months, however, it has fallen by 50%. Many investors, therefore, already suspect the bursting of a bubble. But unlike hydrogen stocks, companies like JinkoSolar are making significant profits and their products are in demand. Although the stock is technically battered and is not an alternative in the short term, investors are probably already standing on the sidelines to buy JinkoSolar at the right valuations.
Even though the solar sector has a future, investors are less broadly positioned with the stock than with a pure silver stock. Since silver is needed in several future industries, stocks like First Majestic Silver or Silver Viper could be a compelling argument. As the former Company has long since arrived in the harsh reality of commodity producers needing to replace reserves, Silver Viper offers an excellent option to benefit from the market's growing focus on future metals.
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