Pan American Silver Corp. (Nasdaq: PAAS)
is a silver mining company that has experienced a significant pullback in price since hitting its high in March. That means patient investors have a nice chance to enter at lower prices while the market calms down.
The parabolic move up in silver prices this spring helped provide a real stimulus to the share prices in some of the mining stocks. When silver prices pulled back after the Chicago Mercantile Exchange (Nasdaq: CME
) raised margin rates over and over, the share prices of silver producers were negatively impacted
The hot money has fled the sector and won't be back for a while, with equity prices now trading in the middle of their 52-week range. This gives patient investors, who are not chasing the current money, a chance to add or increase their exposure to silver miners without paying a pretty penny.
Why Pan American Silver is a "Buy"
When I look at a mining company, there are a few things I have learned to look for: Is the company already leveraged to the gills? How leveraged is it to the upside of its sector? Is it operating at a profit? Does it have a track history of operating at a profit?
In the case of Pan American Silver Corp., the company passes the test.
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