The large-cap, big name stocks are all you hear about in the media. You know the names… Apple (APPL), Google (GOOG), and Caterpillar (CAT) are just a few. After listening to the hype, you’re probably salivating to buy some of these big name stocks.
However, $600, $100 and even $50 stocks are just out of most investors reach…
If you can’t justify paying the big price tag, not to worry… we have a small-cap penny stock alternative you can buy instead. Not only will it cost less, you’ll be able to buy more shares!
This week, we’ve found a great alternative to silver mining giant, Pan American Silver (PAAS). PAAS is the second largest silver miner in the world, and has properties located in both North and South America.
The company produced 6.9 million ounces of silver in the fourth quarter of 2012, with more than 25.1 million ounces of silver produced for the year.
That’s pretty impressive-but unfortunately for us this stock trades out of “penny stock” range at $17 a share with a $2.6 billion market cap.
I’ve found one junior miner that is already producing silver, yet trades in the land of penny stocks…
Great Panther (GPL)
Great Panther Silver is a profitable silver mining and exploration company. GPL focuses on the mining of precious metals from its two wholly-owned operating mines in Mexico. Great Panther’s mission is to become a leading primary silver producer by acquiring, developing and profitably mining precious metals- mostly silver.
As I stated above, GPL is already running profitable and successful mines in Mexico. They’re also growing revenue through the acquisition and development of additional properties.
The company’s two producing mines responsible for all of their production: The Guanajuato Mine Complex, and the Topia Mine. As I referenced above, Great Panther also has a developmental stage mine in their San Ignacio site which the company is readying for production sometime within the next year. In fact the company is planning further site development in mid-2013, targeting added production in 2014.
So what makes GPL a buy?
It’s not the valuation when looking at the company’s P/E ratio, price to book- but rather it’s PSR, or price to sales ratio. You see, GPL trades at just 3.2x while the industry average is 11.6x. That’s a fair apples-to-apples assessment when comparing them to their peers, and shows us there’s a discount at hand when looking at revenue.
Additionally, GPL has lost its former tight correlation with spot silver prices. As a primary silver miner, Great Panther normally trades in line with the metal itself. See for yourself…
As you can see, this disconnect happened in November of last year. Once the market realizes the discount to spot silver that GPL shares now trades at, I suspect shares will be headed higher. Furthermore, Great Panther just announced record production numbers in the fourth quarter… ahead of earnings which are due out any day now.
Given the low PSR to industry average, and the unusual disconnect from spot silver prices, GPL shares are a real bargain, and worth adding to your portfolio.
Keeping you one step ahead,