Looking for the best value shares to buy right now? Here’s one soaring stock I think is worth considering because it could keep climbing as precious metals rally.
Silver star
Gold’s sprint to record highs has been one of the biggest commodities stories of 2024. Just this week it hit another all-time peak above $2,480 per ounce on hopes of an imminent Federal Reserve rate cut.
But silver’s ascent this year has been even more impressive. It’s gained 27% in value since 1 January versus gold’s 21% rise. And it has further scope to rise, perhaps even more so than gold, as rates fall and industrial demand for silver likely increases. This makes silver stocks something for investors to consider buying today.
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Hochschild Mining (LSE:HOC) is one silver miner on my watchlist right now. The business operates a string of silver and gold mines across The Americas. And earnings are tipped to take off in the short-to-medium term, thanks to strong metal prices and the company’s efforts to boost production.
Earnings surge
| Year | Earnings per share (in $) | Year on year increase |
|---|---|---|
| 2023 | (10 cents) | – |
| 2024 | 27.2 cents | – |
| 2025 | 33 cents | 21% |
| 2026 | 41.6 cents | 26% |
Production issues caused FTSE 250-listed Hochschild to swing to a loss last year. This could happen again, but it’s tipped to move into the black in 2024 with record double-digit rises in each of the next two years.
These bright forecasts partly reflect Hochschild’s Mara Rosa gold asset in Brazil reaching commercial production in recent months. The mine’s tipped to produce between 83,000 and 93,000 ounces in 2024. And it will do this at a far lower cost than the company’s other operations.
All-in sustaining costs (AISC) at Mara Rosa range $1,090-$1,120 per ounce. That’s much lower than AISC of above $1,600 at the firm’s San Jose and flagship Inmaculada projects.
Hochschild expects to produce 343,000-360,000 gold equivalent ounces in 2024, or 28.5m-29.9m silver equivalent ounces.
Dividend bonus
Investing in mining stocks over, say, a gold or silver tracker fund has its advantages and disadvantages. As Hochschild saw last year, profits can dive if output issues emerge and profits dive.
But on the plus side, a commodities producer can provide greater returns that a tracker on positive operational news. In addition, some mining companies provide a dividend, while a metal-tracking fund provides zero income.
Hochschild, incidentally, offers a dividend yield of 1-1.2% for the next three years.
A top value stock
As I mentioned, the outlook for silver prices (like those of gold) remains attractive for the rest of the year. In fact, with the gold/silver ratio at 1:77 — above the long-term average of around 1:65 — the grey metal looks like it has more ground to catch up.
And I believe Hochschild shares could be a great way for value investors to play this theme. It trades on a price-to-earnings (P/E) ratio of 8.8 times for 2024. And this figure eventually drops as low as 5.8 times for 2026.
