3 Mining Penny Stocks to Watch Right Now
Often, investors will turn to mining penny stocks to avoid both economic and political turmoil. But, throughout 2021, investors & traders have turned to these companies for their growth potential. The mining industry and corresponding penny stocks have quite a bit to offer. On the one hand, there are a variety of companies that exist within the mining industry. These could be pure-play mining penny stocks such as those that physically mine metal ore. Additionally, it could be companies that are involved in metals recycling or mining equipment production.
In the trailing 1 year period, the benchmark SPDR S&P Metals and Mining ETF (NYSE: XME) has returned more than 136% to investors. This is compared to the Russell 1000, which returned around 48% in the same period. These figures represent the ETFs at their mid-March levels.
To find value in the mining industry, investors should first identify what area they wish to invest in. On one side, we have precious metals like gold and silver. These are historically more stable than other metals and can be viewed as safe-haven stocks. On the other hand, we have companies that mine everything from materials used in battery production to rare earth metals and more. Both of these niches could have value, but it depends on your investing goals. Considering all of this, here are three mining penny stocks to watch right now.
Mining Penny Stocks to Watch
Peabody Energy Corp.
While coal power may not be around forever, Peabody Energy has some interesting prospects in the works right now. Investors tend to believe that solar and renewable energy penny stocks are the way of the future, and that may be true. But, it’s also worth considering that we are a long way from being completely dependent on renewables. This means that in the meantime, fossil fuels are still in high demand. So for now, it’s about finding the most profitable non-renewable energy penny stock for the foreseeable future.
With Peabody, there are both pros and cons. One of the cons is that Peabody recently suspended its dividends. This is due to both high debt amounts and its inability to pay off its current bonds. In its 2020 results, Peabody did not do much to inspire confidence amongst investors. It went from an adjusted EBITDA of $883 million in 2019 to $258 million this past year.
With this, it isn’t easy to seem optimistic about the future of Peabody Energy Corp. The plus side here is that BTU tends to be quite volatile. Furthermore, the company is in the middle of a transition period. CEO Glenn Kellow has agreed to step down this summer as part of the planning. On top of this, the decrease in coal last year hasn’t deterred analysts from getting behind the stock. B. Riley was the most recent to weigh in with a boost to its price target fro m$1.45 to $3.50. The firm also has a Buy on the stock. For now, we’ll have to see if infrastructure spending gives a boost to manufacturing and if that manufacturing will coal to power operations.
Taseko Mines Ltd.
Taseko Mines focuses on the mining of copper ore. This includes development projects around British Columbia, Arizona, and more. When mining operations ceased following the surge in Covid cases last year, TGB was adversely affected. However, since then, it has been able to resume its mining operations fully.
In February, Taseko announced a massive fundraising round, raising $400 million through senior debt notes. Stuart McDonald, President of the company, stated that “we now have a cash balance of approximately $200 million and no significant debt maturities until 2026. With the majority of the required funding for our Florence Copper project now in hand, we are moving forward with final design engineering of the commercial production facility.”
More recently, Taseko announced an extension of its copper price protection strategy. To keep the price of its copper consistent, it purchased put options covering 41 million pounds of copper at a strike price of $3.75 per pound for the latter half of 2021. McDonald states that “with the uncertainty in the world today around the impacts of Covid-19 and ongoing volatility in metal markets caused by a number of global economic and political issues, we felt that it was prudent to extend our price protection strategy.”
Its key Florence Copper project recently reached several milestones following Taseko’s win in the Arizona Superior Court of Appeals. With the judge leaning in TGB’s favor, progress can continue on this massive copper mining project. So, in contrast to Peabody Energy, Taseko Mines could be worth watching in the long term.
Denison Mines Corp.
Denison Mines is a decades-old uranium mining company. Despite Denison’s longstanding history, the rise of Reddit penny stocks has resulted in large price gains amongst certain companies over the past year. More recently, this seems to be the case with Denison Mines. While most Reddit penny stocks are bought for reasons that vary greatly, Denison actually holds a great deal of intrinsic value.
As a uranium mining company, DNN stock has a place in both the present and the future. In terms of efficiency, uranium is 16,000 times more efficient than coal in the amount of electricity it can produce. While there are social barriers to uranium becoming more popular, these seem to be dwindling every day. By a long shot, uranium energy has the highest capacity factor of any energy source. It can achieve a capacity factor of over 92%, while the next closest is geothermal power, which has a capacity factor of only 74%.
In addition to its incredible efficiency, the U.S. Energy Information Administration reports that uranium production hit an all-time low in 2019. But, with Biden as President and the corresponding push toward renewable energy, we could see uranium production move back up in the short term. So if you’re looking for uranium or nuclear energy penny stocks to watch, DNN could be an interesting one to have on the list.