18. February 2021 | 10:08 CET
First Majestic Silver, Silver Viper Minerals, Endeavour Silver - After the Short Squeeze is Before the Short Squeeze
Silver has performed much better than gold in recent weeks and months. Investors were able to book profits with the precious metal, while losses were made with gold investment. Often the prices of precious metals run relatively in unison. The fact that the demand situation of silver also includes the industry it can lead to short-term deviations, but also speculation can move prices powerfully in the short term. Some stocks in the silver sector began to rally during January as the market bet on a short squeeze in some candidates based on short-sale data. We give you an update and tell you where it's worth being involved.
time to read: 2 minutes by Carsten Mainitz
FIRST MAJESTIC SILVER CORP - Where are the Shorties?
The silver producer's stock gained 2/3 from January to CAD 28 and is currently trading around CAD 22. What happened? First Majestic has been one of the most heavily shorted stocks for many years. When investors turned to shorting stocks like GameStop at the beginning of the year, and the securities went through the roof due to a short squeeze, First Majestic's stock also got on traders' radar. According to market data, the Company's short-sold shares accounted for about 23% of the total share count in late December and mid-January. However, by January 29, that figure was only about half, explaining the abrupt end to the share's upward movement.
Today, investors are likely to pay more attention to the Company's fundamental data because the Group plans to publish Q4 figures and those for the past fiscal year. In January, First Majestic released the corresponding production data and formulated a significant increase in silver production in the current year.
The Company is among the TOP 20 silver producers in the world. The core of the activity are the three silver mines in Mexico - the San Dimas Silver & Gold Mine, the Santa Elena Silver & Gold Mine and the La Encantada Silver Mine. Despite good figures and a positive outlook, the share is not one of the analysts' favorites. The experts consider the shares to be too expensive and suggest a downside potential of around 20%.
SILVER VIPER MINERALS CORP - Patience will pay off
Sometimes investors need a little more patience until a company's value is also reflected in the stock market price. Silver Viper Minerals is valued at only CAD 36 million at current prices and is thus clearly too cheap.
The exploration Company is focused on gold & silver deposits in the state of Sonora, in northwestern Mexico. The core of its activities is the wholly-owned La Virginia Gold-Silver Project. In addition, Silver Viper has an option to acquire 100% of additional claims (Rubi-Esperanza). In the past, extensive drilling with a length of 52,000m has been carried out. A few weeks ago, the Company reported good drill results confirming high silver & gold grades in the El Rubi zone.
Further increases in the silver price and project progress will provide momentum to the stock. The current valuation is very moderate and leaves room for upside.
ENDEAVOUR SILVER CORP - things are going well
Endeavour Silver is a mid-tier silver and gold producer that owns three producing mines in Mexico. In the last few weeks, the Company "produced" rows and rows of good news. No wonder, then, that the share price increased significantly to currently around CAD 7.50. The Company is now valued at CAD 1.2 billion.
At the end of January, the Canadians published a production forecast for the current year. According to this, 2021 silver production is expected to be between 3.6 and 4.3 million ounces and gold production between 31,000 and 35,500 ounces. This output equates to silver equivalent production of 6.1 to 7.1 million ounces. The Group will release full 2020 data on March 1. Earlier this month, the Company released a resource update, after which silver deposits in the top two categories increased 11%.
Endeavour Silver is on a roll. The excellent outlook justifies further rising prices. Currently, the stock is only a hold in the eyes of most analysts. However, it usually takes a few weeks for the information to be fully reflected in the analyses. We would therefore not be surprised to see upgrades of the stock soon.