Market analysts and investors often eye silver stocks as low-cost investments in precious metals, particularly as they seek relief from volatile equity markets. Silver benefits from having a wide variety of industrial uses—in dentistry, electrical contacts, water filtration, solar panels, and medical instruments—that supplement the demand for silver in the form of jewelry or as an investment.

Successful silver mining companies are those that not only have the largest or most promising silver resources but also do the best job of controlling production costs. The following are five of the top-rated silver mining companies in the best position to see their revenues, profits, and stock prices climb in the event of rising silver prices.

Key Takeaways

  • Silver is a precious metal that is more affordable per ounce than gold.
  • Aside from investment as a commodity, silver has several important industrial applications as well.
  • Investing in silver mining companies can be a smart way to gain exposure to both the metal's value and its demand in manufacturing.

Wheaton Precious Metals Corp.

Wheaton Precious Metals Corp. (WPM), formerly Silver Wheaton Corp., has a unique business model that has made it one of the most successful silver companies. As a silver streaming company, it is not directly engaged in the exploration and development of silver mines. That means it invests in the production of other silver mining companies through long-term purchase agreements that enable it to lock in future silver production at advantageous prices. This business model has helped it grow into the silver mining company with the largest amount of proven and probable silver reserves in the world, with over 200 million more ounces of silver than second-place Fresnillo Plc.

Wheaton is not burdened with all the overhead costs associated with digging silver out of the ground. The company's operating margin is in the neighborhood of 30%, and with 18 long-term purchase agreements for silver priced as low as $4.55 per ounce, the company is likely to show excellent profit margins for years to come.

Wheaton stock rebounded from its 2015 low at $11.03 per share and in 2019 was trading above $30 per share. With a 2011 high near $47 per share, the company has tremendous upside potential, despite having almost doubled in value during the past year.

First Majestic Silver Corp.

First Majestic Silver Corp. (AG) is engaged in the exploration, development, and production of silver, and also in the acquisition of existing silver mines. The company is of medium size, with a market cap of $2 billion, compared to Wheaton's $12.3 billion market cap. However, First Majestic holds excellent growth prospects. As of December 2017, it owned and operated six mines and the company's annual pure silver production had grown rapidly since 2006, increasing from approximately 2 million ounces to approximately 12 million ounces as of 2018.

Precisely because it is one of the smaller silver mining companies, First Majestic's stock was hard hit in the wake of declining silver prices in 2017 and 2018. Since making a 2011 high near $25 per share, the company's stock tumbled to a low of $2.66 per share. However, thanks to a rebound in 2019, the stock now sits at $9.40 per share. A 10-year track record of production growth and virtually non-existent long-term debt argue for First Majestic as a top-ranked growth investing prospect among silver miners.

Pan American Silver Corp.

Pan American Silver Corp. (PAAS) is engaged in the exploration, development, and production of silver mining properties throughout Mexico and South America. Although it maintains an exclusive focus on silver production, it also sells the gold, copper, and zinc it discovers along the way. The company is the sixth-largest silver producer worldwide and holds the fourth-largest silver reserves.

Based on a number of organic growth projects, Pan American expects to continue boosting production well past 2019. The company lowered its cash costs by approximately 28% in 2017 from the prior year. The company's stock has rebounded from a 2015 low of $5.85 per share and is trading close to $16.00 per share, as of Sept. 2019. The company's book value is $11.50 per share.

American Silver Eagle coins have become one of the most popular precious metals investments since the turn of the century.

Endeavour Silver Corp.

Endeavour Silver Corp. (EXK) is a miner that, like First Majestic, has potential as a growth stock. Based in Canada, the company acquires, explores, develops, and produces silver and gold mining properties located in Chile and Mexico. Two expansion programs at operating mines are projected to catapult the company onto the list of top worldwide silver producers in the future.

The main advantages for Endeavour Silver include strong organic growth potential for its primary mining projects, the extremely high grade of its silver production, and substantial upside potential for several of its current mining projects. Endeavour has only $3 million in total debt and revenues of $33 million. It's currently trading at approximately $2.35 per share with a price-to-book ratio of 2.60. It has a relatively small capitalization of $340 million.

Hecla Mining

Hecla Mining Company (NYSE: HL) is the oldest silver and gold mining company in North America, established in 1891 in Coeur d'Alene, Idaho. It ranks as one of the leading low-cost silver mining companies in the United States.

The company has silver mines in Idaho and Alaska and is rapidly becoming a significant gold producer thanks to its mining operation in Quebec. Hecla Mining has promising exploration and development projects in five additional gold and silver mining operations in the U.S., Canada, and Mexico. The company ranks seventh in world silver reserves with just under 200 million ounces. Its 2017 silver production was 12.5 million ounces.

The company's solidly established base, diversified revenue stream, and promising current development projects have provided a strong environment for the turnaround in recent years. However, the stock has underperformed its peers and fell to lows of $1.21 in 2019. It now trades $1.84 per share.