$AG setting up for a rip your face off rally #tothemoonFirst Majestic is a hated stock as of now, it also has the largest short position in the entire silver miners listed in NYSE. Bad sentiments and frustrated investors is a great combination to identify when a sector bottoms.
Looking at the price action as of now, especially from $4.5 to $7.8 it looks like a strong bullish reversal. Also this is a institution move, smart money is buying silently. Also with silver heading to new highs, which means that silver miners are turning healthy. Many silver miners are making decent margins already around 15-20% OPM, the higher silver prices go the more Free Cash Flow will be generated which will directly impact bottom line. And, the valuations are dirt cheap.
Reasons why like like First Majestic :
- Acquired Gatos Silver recently, by this deal the net AISC improves, i feel it should be around $20-18. Before acquisition NYSE:AG AISC was $25, Gatos Silver being a low cost producer should now cumulatively bring the AISC down.
- They also announced a share repurchase program which is a positive.
- They are the only silver miner with a Mint capacity, First Mint Store. Unlike other mints, which are either government-owned or privately held. Good addition to capture the entire value chain.
Well at current valuation and where the silver price is at its hard for me to see the downside. So i may be biased. I will only exit this scrip if i see Silver go below $23. That is my exit criteria.
Disclaimer : This analysis is purely for education. As i am invested in this scrip I may be biased. Don't take this as an investment advice. Please consult your financial advisor before any speculative investments.
