AG is the ticker of First Majestic Silver Corp or the name the company identifies itself in the stock market. Those unfamiliar with the company should know that the Vancouver, Canada-based First Majestic Silver Corp is a gold and silver mining company operating in the United States and Mexico. The company has owned 100% of the La Encantada Silver Mine since 2006 and is one of the largest producing silver mines. In addition, the company operates the Santa Elena Silver/ Gold mine, the Jerrit Canyon Gold Mine, and the Silver/Gold Mine of San Dimas. The company, founded on September 26, 1979, by Keith Neumeyer, has focused over the past few days as its shares or AG stock surged ahead about a week ago by more than 10%.
The stock rally became evident soon after going through a negative note during the four trading sessions on Wednesday, January 19. The rally was more significant against the company’s reporting of solid Q4 production results. As of January 20, though short, the AG stock price touched $14.84 per share, recording an increase of 12.1%, whereas the rise in the TSX Composite Index for the day was a mere 0.3%.
Has the company results pushed up AG stock?
On January 19, a company press release confirmed that the company achieved record production in Q4. The company has a market cap of $3.4 billion and during the quarter produced 8.6 million equivalent ounces of silver that translated into a 17% sequential increase. The figure included 67,411 gold ounces and 3.4 million silver ounces. The record Q4 production of 26.9 million silver equivalent ounces helped the company meet its production target for the entire year in 2021.
The company holds a lot of optimism in 2022. First, Majestic hopes to produce 32.2 to 35.8 million silver equivalent ounces of precious metals during the ongoing year. Analysts believe that these positive factors gave much confidence to investors that resulted in the sharp rally and pushed up the stock price AG.
The Extraneous Factors
In addition to the factors related to the company’s production performance that boosted investor confidence and the stock price, some extraneous factors also contributed to the surge. During the same period, both gold and silver prices were marching higher. According to Kitco.com, the precious metal data source, silver prices touched $24.22 per ounce, a seven-week high and moving toward the November 2021 prices. The same happened with gold, which touched $1842.40 per ounce.
According to the market watchers, the upward trend of silver and gold prices is due to the skepticism among investors about the high-interest rate in the offing to fight the unprecedented inflation. During the first week of January, the inflation rate in the US was the highest in 39 years, and for the UK, the inflation rate of 5.4% was the highest in 30 years. The trend is compelling investors to turn their attention to precious metals, which generally gain value when the fiat currency like dollars loses value.
Should you put your money in First Majestic?
Going by the observations of different analysts, investors have to see through the diversified opinions ranging from buy to hold to sell and apply their analytical tools to decide what they should do. As per Kitco.com, as the inflation threat keeps growing, the trend of rising prices of precious metals will continue for some. Investors might think that it bodes well for the AG stock forecast as the price of precious metals stocks will enjoy an upward trend. However, the picture is not as rosy as it might appear, and investors should consider the threat factor too. Although the AG stock price today seems well poised at a valuation of about 69 times the earnings, the stock might still be expensive. After all, you need to look for cheap gold and silver stocks, but First Majestic stock does not meet the criteria.
As long as the precious metals prices keep surging, it is natural that the stocks of precious metal mining companies will maintain the bullish run. AG stock will also ride on the wave and hold the momentum even when the market cools because of increased production.
