Silver had a tough 2014. Prices peaked around $22 last February, and except for a couple of stronger months over the summer, silver was mostly in a downward trend to end the year under $16.
As 2014 came to a close, so did the weakness in silver prices that had been plaguing the market for the last few months. Shares of many silver-related stocks were priced for a disaster.
The new year is still young, but silver prices have bucked the weakness in oil and moved higher in the first few weeks of 2015.
Some companies have soared in the process, including one I’ve had my eye on for quite some time now.
Silver Standard Resources Inc. (USA) (SSRI) explores for and develops silver and silver resource dominant mineral projects throughout the Americas. Back in the fall, the silver correction translated into a steep collapse in the SSRI stock price, and while many investors would have been scared away by the weakness, I was intrigued.
The key here is that anytime SSRI stock had seen a collapse like that in the past, it had lifted substantially afterward. After digging into SSRI stock’s past, I found that this was the sixth time Silver Standard Resources had seen its relative strength index (RSI) dip below 30 — a point that traditionally indicates a stock has lagged the market too far and is now ready to return to average performance.
Every single time that happened, SSRI rebounded 20% to 50% off its lows. Silver Standard Resources is up more than 20% already in 2015.
SSRI stock got some attention after Silver Standard Resources reported a spectacular earnings beat in its third-quarter report. Wall Street had expected to see Silver Standard Resources return to profitability with earnings around 1 cent to 3 cents per share, but SSRI actually posted 18 cents per share.
Despite silver prices sinking close to 20% between June and September, SSRI managed to keep its revenue growing at a double-digit rate and return to profitability much earlier than the Street expected.
Despite the impressive report, market conditions pushed SSRI stock to a 52-week low of $3.92 on Nov. 5. But since then, Silver Standard Resources has been strong, gaining about 50%.
SSRI stock’s chart tells me that the short-term trend still looks good enough to feed the bounce I’ve been looking for, and Silver Standard Resources has certainly proven it can come a long way in a very short period of time. At this point, I believe SSRI is in a strong enough technical position to rebound to at least $7.47 without encountering much resistance.
Hilary Kramer is the editor of GameChangers, Breakout Stocks Under $10, High Octane Trader, Absolute Capital Return and Value Authority. She is an accomplished investment specialist and market strategist with more than 25 years of experience in portfolio management, equity research, trading, and risk management. She has extensive expertise in global financial management, asset allocation, investment banking and private equity ventures, and is regularly sought after to provide her analysis on Bloomberg, CNBC, Fox Business Network, and other media.
