70% Return? Precious Metals Are Rebounding And This Analyst Sees An Opportunity

Zinger Key Points
  • Pan American Silver expects a 35% increase from one of its mines this year, which will generate $392.1 million.
  • Overall bookings in 2021 were $1.63 billion, along with $97.43 million in earnings.

Gold, silver, and palladium are among the precious metals that have been recently been bucking the general downtrend in metal prices.

Between June and July, the global precious metals index fell by almost 4%, Though on July 20th, the index bounced off multi-month lows, driving up the prices of gold and silver bullion — something Gianni Di Poce intends to take advantage of.

What happened: Di Poce noted that the macroeconomic situation is changing in a way that could soon start to be beneficial for precious metals in his weekly "Benzinga Pro Insider Report."

“If long-term bond yields keep coming down, assets like metals could find a greater appeal,” Di Poce wrote. “Not to mention, there is no shortage of monetary or geopolitical turmoil right now. A correction in the dollar could help too.”

Di Poce is bullish on Pan American Silver Corp. PAAS, a silver mining company that owns and operates mines in Mexico, Peru, Canada, Argentina, and Bolivia — Pan American also extracts other metals including gold, zinc, lead, and copper.

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“The company has managed to continue growing its revenue despite volatility in metal prices,” the analyst wrote. The company has $174.05 million in free quarterly cash flow, which protects it somewhat from volatility.

PAAS expects a 35% increase in production from one of its mines this year, which will generate $392.1 million in operating cash flow. The company’s cash and cash equivalent balances grew by $116.4 million in 2021, and it increased its quarterly dividend for the third time in 18 months.

Overall bookings in 2021 were $1.63 billion, along with $97.43 million in earnings compared to $784.5 million, and $10.29 million respectively in 2018.

 

Action plan: 70% potential return

“I am bullish on PAAS so long as the stock remains above $18.00-$18.50,” the analyst wrote. “Upside target $32.00-$34.00”

Di Poce is an analyst at The Mercator, a research company dedicated to the study of economic and financial market trends.

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