3 Buy or Hold Silver Stock Options for 2024 Growth

Driven by a solid green economy, with investments in photovoltaics, 5G networks, and rapid adoption of electric vehicles, silver industrial demand is expected to remain robust, boosting the silver industry’s growth. So, let’s analyze if you should buy or hold silver stocks Pan American Silver (PAAS), Fortuna Silver (FSM), and Gatos Silver (GATO) for growth this year. Read on to know more….

Silver is expected to experience significant demand, with its end uses ranging from jewelry and silverware to industrial and technological applications. In the long term, silver industrial demand will likely benefit from widespread vehicle electrification, the growing adoption of 5G technologies, and the advancement in the solar energy sector.

Amid this backdrop, it could be wise to invest in fundamentally sound silver mining stock Fortuna Silver Mines Inc. (FSM) for solid growth in 2024. However, investors could hold Pan American Silver Corp. (PAAS) and Gatos Silver, Inc. (GATO) and wait for a better entry point in these stocks.

Silver is known as one of the most versatile precious metals, and it witnesses robust demand in multiple end-use applications, including industrial fabrication, jewelry and silverware manufacturing, physical investment, photovoltaic cells (PV), and more. Silver is a popular metal for jewelry because of its luster, affordability, and durability.

The demand for silver in the form of bullion coins and silver bars has sharply increased in recent times, as it is historically considered a store of value and a hedge against inflation. Investors generally turn to silver to preserve their wealth.

In 2023, silver industrial demand has achieved a new annual high, as reported by the Silver Institute. Industrial demand for silver is anticipated to grow 8% to a record 632 million ounces last year. Primary growth drivers include increased investment in photovoltaics, power grid and 5G networks, growth in consumer electronics, and high vehicle production.

A report by Oxford Economics for the Silver Institute expected silver industrial demand to increase 46% through 2033, while jewelry and silverware demand is projected to grow 34% and 30%, respectively.

According to a report by the Business Research Company, the silver ore market is expected to reach $11.40 billion by 2028, growing at a CAGR of 8.8%. Silver’s use in electric vehicles (EVs) and solar panels will gain immense momentum in the upcoming years. Solar panels have been gaining traction amid the global green energy transition.

The global solar PV panels market is projected to total $287.13 billion by 2030, expanding at a CAGR of 7.7% from 2024 to 2030. A significant surge in solar power installation will drive silver demand.

Growing silver demand, especially from the industrial sector, tight supplies, and expectations of interest rate cuts by the Federal Reserve in 2024 could push silver prices high this year. JPMorgan forecasts silver will cross the $30 per ounce mark anytime soon in 2024.

Given these favorable trends, let’s look at the fundamentals of the three Miners – Silver stocks, beginning with number 3.

Stocks to Hold:

Stock #3: Pan American Silver Corp. (PAAS)

Headquartered in Vancouver, Canada, PAAS is involved in the exploration, mine development, extraction, processing, refining, and reclamation of silver, gold, zinc, lead, and copper mines in Canada, Mexico, Peru, Argentina, and Bolivia. The company holds interest in the La Colorada, Dolores, Morococha, La Arena, Timmins West, Bell Creek, San Vicente, and Cap-Oeste Sur Este mines.

On November 6, 2023, PAAS completed the previously announced sale of its 57.74% interest in Agua de la Falda S.A. (ADLF), a Chilean company that holds the historical Jeronimo project located in the Atacama region of northern Chile, and various adjoining concessions.

Also, in September, PAAS completed the previously announced divestment of its 56.25% interest in the MARA project in Argentina and its 92.3% interest in the Morococha mine in Peru. The sale of these non-core assets is aligned with the company’s stated aim of optimizing its portfolio and reducing debt and future financial obligations.

PAAS’ trailing-12-month gross profit margin and EBITDA margin of 30.15% and 25.09% are favorably higher than the industry averages of 28.53% and 17.54%, respectively. But the stock’s trailing-12-month net income margin of negative 11.13% compared to the industry average of 5.88%.

In terms of forward non-GAAP PEG, PAAS is trading at 1.37x, 18.8% lower than the industry average of 1.69x. However, the stock’s forward EV/Sales and Price/Sales multiples of 2.60 and 2.58 are higher than the industry averages of 1.65 and 1.24, respectively.

PAAS’ revenue and EBITDA grew at respective CAGRs of 19.3% and 14.7% over the past five years. Additionally, the company’s total assets rose at a CAGR of 30.3% over the same timeframe.

In the third quarter that ended September 30, 2023,…