Recommendation: Speculative Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Potential Upside |
|---|---|---|---|---|---|---|---|
| 12 Sep, 24 | PAAS | Speculative Buy | USD 20.51 | USD 22.2 | USD 24.3 | 12 days | 18.5% |
Data Powered by EOD Historical Data (“EODHD”).
Pan American Silver Corp. engages 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. It holds interests in the La Colorada, Dolores, Huaron, Morococha, Shahuindo, La Arena, Timmins West, Bell Creek, Manantial Espejo, San Vicente, Joaquin, and Cap-Oeste Sur Este mines. The company was formerly known as Pan American Minerals Corp. and changed its name to Pan American Silver Corp. in April 1995. Pan American Silver Corp. was incorporated in 1979 and is headquartered in Vancouver, Canada.
Decreasing Cash Cycle: 123.5 Days in Q1 FY24 vs 172.0 Days in Q1 FY23
Lower Credit Risk Exposure: Debt-Equity of 0.17x in Q1 FY24 vs Industry Median of 0.21x
Short-Term Profitability: Gross Margin of 11.2% in Q1 FY24 vs Industry Median of 41.8%
Lower Liquidity: Current Ratio of 2.11x in Q1 FY24 vs Industry Median of 2.12x
Asset Concentration Risk, Project Development and Execution Risks, Acquisition Integration Risks, Operational Performance of Key Mines, Exploration and Reserve Replacement, etc.
| Entry Price | Support* | Target 1 | Target 2 |
|---|---|---|---|
| 20.51 | 16.5 | 22.2 | 24.3 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
Financial Position and Debt Structure: As of June 30, 2024, Pan American’s cash and short-term investments increased by USD 37.2 million, totaling USD 368.6 million. The Company’s working capital stood at USD 692.0 million, inclusive of cash and investments, with an additional USD 750.0 million available through its revolving Sustainability-Linked Credit Facility ("SL-Credit Facility"). Total debt amounted to USD 809.5 million, largely comprising two senior notes, lease liabilities, construction loans, and other loans payable. On August 7, 2024, the Company declared a cash dividend of USD 0.10 per common share, payable on August 30, 2024, to shareholders of record as of August 19, 2024. Cash dividends for Q2 2024 totaled USD 36.3 million, qualifying as eligible dividends for Canadian income tax purposes.
Project Developments and Progress: At La Colorada, Pan American allocated USD 9.8 million in project capital during Q2 2024, primarily for exploration and engineering of the Skarn project, and for completing new ventilation infrastructure. The installation of two exhaust fans on the surface of the Guadalupe ventilation shaft in July contributed to improved ventilation within the mine. As a result, mining rates in the higher-grade Candelaria zone have increased, and the Company expects throughput to rise to approximately 2,000 tonnes per day by the end of 2024.
Technical Commentary:
On the daily chart for PAAS, the stock price is currently trading above key horizontal support levels and has established solid support at a lower level, suggesting potential for upward movement. This is reinforced by two consecutive bullish candles. The 14-day Relative Strength Index (RSI) is climbing from the midpoint, signaling bullish momentum. Additionally, the stock is trading above the 21-day Simple Moving Average (SMA), which could act as a support level. Key resistance levels to monitor are 22.2 and 24.3, while support levels to watch are at 18.8 and 16.5.
Considering the enhancing cash position, debt structure, recent Project Developments, and technical indicators analysis, a ‘Speculative Buy’ recommendation has been given to Pan American Silver Corp. (NYSE: PAAS) at the last closing price of USD 20.51, as on September 12, 2024.
Data Powered by EOD Historical Data (“EODHD”).
Sector: Basic Materials Industry: Gold
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| PAAS Pan American Silver Corp. |
-0.14 0.66% | 21.04 | - | 18.90 | 2.87 | 1.20 | 3.08 | 21.01 |
| NEM Newmont Goldcorp Corp |
-0.2729 0.52% | 52.47 | - | 11.61 | 4.29 | 2.48 | 4.55 | 26.44 |
| ZIJMF Zijin Mining Group Co Ltd-H |
- -% | 2.37 | 16.00 | 16.89 | 0.15 | 2.75 | 0.20 | 1.78 |
| ZIJMY Zijin Mining Group Co Ltd ADR |
- -% | 45.12 | 15.04 | 17.39 | 0.15 | 2.83 | 0.20 | 1.78 |
| GOLD Barrick Gold Corp |
-0.105 0.53% | 19.55 | 591.00 | 16.78 | 2.80 | 1.35 | 2.85 | 8.96 |
Data Powered by EOD Historical Data (“EODHD”).
Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
Disclaimer :
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