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Precious metals like gold and silver enjoyed a bullish run this year as global uncertainty, Brexit concerns, and financial market instability bolstered demand for precious metals, especially in the first half of 2016.
However, gold lost its luster in the second half on a strong greenback and the prospect of rate hike while silver continued its solid run on an uptick in global manufacturing and industrial activity as well as strong growth in the U.S. Notably, silver is used in a wide range of industrial applications. About 50% of the metal’s total demand comes from industrial applications while 30% comes from jewelry/silverware/coins and medal manufacturers (read: Will Silver ETFs Outshine Gold in 2017?).
Industrial demand for silver is on the rise and expected to continue next year, thanks to the ongoing growth in the global solar PV industry, rebound in global computer shipments, as well as new sources of demand for sensors used in the Internet of Things and OLED lighting. While demand is increasing, supply of the metal is expected to decline over the next several years. As per the GFMS Thomson Reuters, global silver mining production, which peaked in 2015, is expected to decline over the next several years.
Further, Trump is acting as a wild card for the grey metal lately given his promise to revive U.S. manufacturing and spend big time on infrastructure, rebuilding highways, bridges, hospital and many others. Added to the bullishness is the inflationary pressure in the U.S. and China that has raised the metal’s appeal as a hedge against inflation.
Acting as leveraged plays on underlying metal prices, metal miners tend to experience huge gains compared to their bullion cousins in a rising metal market. As a result, PureFunds ISE Junior Silver ETF (SILJ - Free Report) topped the list of the best performing ETFs of 2016, delivering whopping returns of about 133.1% (read: Want to Dig Into Mining ETFs with 100% YTD Gains Seen Already?).
Let’s take a closer look at the fundamentals of SILJ.
SILJ in Focus
This product provides a true small cap play on the silver mining space by tracking the ISE Junior Silver (Small Cap Miners/Explorers) Index. Holding 24 stocks in its basket, the fund is heavily concentrated on the top three firms that collectively make up for 39.8% of the assets while other firms hold less than 6% share. Canadian firms take the lion’s share at 81%, while U.S., Peru and United Kingdom take the reminder. The fund has managed assets worth $47.3 million and trades in a good volume of more than 225,000 shares a day. It charges 69 bps in annual fees (see: all the Materials ETFs here).
Though almost all the stocks in the fund’s portfolio have delivered impressive returns, a few were the real stars having more than doubled this year. Below, we have highlighted those six best performing stocks in the ETF with their respective positions in the fund’s basket:
Top Performing Stocks of SILJ
Coeur Mining Inc. (CDE - Free Report) : The stock has been flying higher, having surged over 268% this year. The company – operating as a silver and gold producer with precious metals mines in the Americas - is expected to deliver incredible earnings growth of 145.6% this year. The stock has seen no estimate revision for the current year over the past 90 days and has a Zacks Rank #3 (Hold) with a VGM Style Score (V stands for Value, G for Growth and M for Momentum) of B. Coeur Mining occupies the top position in the fund’s basket with 14.1% of the total assets.
Fortuna Silver Mines Inc. (FSM - Free Report) : The company, which focuses on exploration, extraction, and processing of mineral properties in Latin America, currently has a Zacks Rank #4 (Sell) with a VGM Style Score of C. The company has seen no earnings estimates revisions over the past 90 days and is expected to grow at a whopping growth rate of 260% for this year. The stock has risen over 142% and accounts for the sixth spot with 5% share in SILJ.
Great Panther Silver Limited : The stock has gained about 235% this year and occupies the ninth position in the basket with 4.5% allocation. The company – engaged in the production of silver in Mexico – is expected to deliver earnings growth of 100% this year. However, the stock has seen negative earnings estimate revisions over the past 90 days. As a result, it has a Zacks Rank #4 (read: 5 ETFs Up Over 100% This Year).
Endeavour Silver Corp. (EXK - Free Report) : It gained about 142% this year with more room for upside as it has a Zacks Rank #3 with a VGM Style Score of B. Additionally, the stock has seen positive earnings estimate revisions of a couple of cents over the past 90 days for this year with an expected earnings growth rate of 187.9%. Investors should note that Endeavour Silver – a mid-tier silver mining company focused on the growth of silver production, reserves and resources in Mexico – takes the sixth position in the fund’s basket and accounts for 4.8% of the total assets.
Pan American Silver (PAAS - Free Report) : The stock occupies the second position in the fund’s basket with 13.2% share and is up nearly 127% this year. The stock witnessed solid earnings estimate revisions of 17 cents over the past 90 days for the current year and has an expected growth rate of 231.6%. Pan American Silver – engaged in silver mining and related activities in Peru, Mexico, Argentina and Bolivia – has a Zacks Rank #3 with an unfavorable VGM Score of C.
First Majestic Silver (AG - Free Report) : The company – engaged in the production, development, exploration, and acquisition of mineral properties with a focus on silver projects in Mexico – takes the third spot in the fund’s portfolio with 12.6% allocation. It has delivered returns of over 127% and has the potential to move higher in the coming weeks, given the expected earnings growth rate of 238.6%. However, the stock has seen negative earnings estimate revision for this year and has a Zacks Rank #4 with a VGM Style Score of D.
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6 Top Performing Stocks of the Best ETF of 2016
Precious metals like gold and silver enjoyed a bullish run this year as global uncertainty, Brexit concerns, and financial market instability bolstered demand for precious metals, especially in the first half of 2016.
However, gold lost its luster in the second half on a strong greenback and the prospect of rate hike while silver continued its solid run on an uptick in global manufacturing and industrial activity as well as strong growth in the U.S. Notably, silver is used in a wide range of industrial applications. About 50% of the metal’s total demand comes from industrial applications while 30% comes from jewelry/silverware/coins and medal manufacturers (read: Will Silver ETFs Outshine Gold in 2017?).
Industrial demand for silver is on the rise and expected to continue next year, thanks to the ongoing growth in the global solar PV industry, rebound in global computer shipments, as well as new sources of demand for sensors used in the Internet of Things and OLED lighting. While demand is increasing, supply of the metal is expected to decline over the next several years. As per the GFMS Thomson Reuters, global silver mining production, which peaked in 2015, is expected to decline over the next several years.
Further, Trump is acting as a wild card for the grey metal lately given his promise to revive U.S. manufacturing and spend big time on infrastructure, rebuilding highways, bridges, hospital and many others. Added to the bullishness is the inflationary pressure in the U.S. and China that has raised the metal’s appeal as a hedge against inflation.
Acting as leveraged plays on underlying metal prices, metal miners tend to experience huge gains compared to their bullion cousins in a rising metal market. As a result, PureFunds ISE Junior Silver ETF (SILJ - Free Report) topped the list of the best performing ETFs of 2016, delivering whopping returns of about 133.1% (read: Want to Dig Into Mining ETFs with 100% YTD Gains Seen Already?).
Let’s take a closer look at the fundamentals of SILJ.
SILJ in Focus
This product provides a true small cap play on the silver mining space by tracking the ISE Junior Silver (Small Cap Miners/Explorers) Index. Holding 24 stocks in its basket, the fund is heavily concentrated on the top three firms that collectively make up for 39.8% of the assets while other firms hold less than 6% share. Canadian firms take the lion’s share at 81%, while U.S., Peru and United Kingdom take the reminder. The fund has managed assets worth $47.3 million and trades in a good volume of more than 225,000 shares a day. It charges 69 bps in annual fees (see: all the Materials ETFs here).
Though almost all the stocks in the fund’s portfolio have delivered impressive returns, a few were the real stars having more than doubled this year. Below, we have highlighted those six best performing stocks in the ETF with their respective positions in the fund’s basket:
Top Performing Stocks of SILJ
Coeur Mining Inc. (CDE - Free Report) : The stock has been flying higher, having surged over 268% this year. The company – operating as a silver and gold producer with precious metals mines in the Americas - is expected to deliver incredible earnings growth of 145.6% this year. The stock has seen no estimate revision for the current year over the past 90 days and has a Zacks Rank #3 (Hold) with a VGM Style Score (V stands for Value, G for Growth and M for Momentum) of B. Coeur Mining occupies the top position in the fund’s basket with 14.1% of the total assets.
Fortuna Silver Mines Inc. (FSM - Free Report) : The company, which focuses on exploration, extraction, and processing of mineral properties in Latin America, currently has a Zacks Rank #4 (Sell) with a VGM Style Score of C. The company has seen no earnings estimates revisions over the past 90 days and is expected to grow at a whopping growth rate of 260% for this year. The stock has risen over 142% and accounts for the sixth spot with 5% share in SILJ.
Great Panther Silver Limited : The stock has gained about 235% this year and occupies the ninth position in the basket with 4.5% allocation. The company – engaged in the production of silver in Mexico – is expected to deliver earnings growth of 100% this year. However, the stock has seen negative earnings estimate revisions over the past 90 days. As a result, it has a Zacks Rank #4 (read: 5 ETFs Up Over 100% This Year).
Endeavour Silver Corp. (EXK - Free Report) : It gained about 142% this year with more room for upside as it has a Zacks Rank #3 with a VGM Style Score of B. Additionally, the stock has seen positive earnings estimate revisions of a couple of cents over the past 90 days for this year with an expected earnings growth rate of 187.9%. Investors should note that Endeavour Silver – a mid-tier silver mining company focused on the growth of silver production, reserves and resources in Mexico – takes the sixth position in the fund’s basket and accounts for 4.8% of the total assets.
Pan American Silver (PAAS - Free Report) : The stock occupies the second position in the fund’s basket with 13.2% share and is up nearly 127% this year. The stock witnessed solid earnings estimate revisions of 17 cents over the past 90 days for the current year and has an expected growth rate of 231.6%. Pan American Silver – engaged in silver mining and related activities in Peru, Mexico, Argentina and Bolivia – has a Zacks Rank #3 with an unfavorable VGM Score of C.
First Majestic Silver (AG - Free Report) : The company – engaged in the production, development, exploration, and acquisition of mineral properties with a focus on silver projects in Mexico – takes the third spot in the fund’s portfolio with 12.6% allocation. It has delivered returns of over 127% and has the potential to move higher in the coming weeks, given the expected earnings growth rate of 238.6%. However, the stock has seen negative earnings estimate revision for this year and has a Zacks Rank #4 with a VGM Style Score of D.
Want key ETF info delivered straight to your inbox?
Zacks’ free Fund Newsletter will brief you on top news and analysis, as well as top-performing ETFs, each week. Get it free >>