Hook / Thesis
Hecla Mining (HL) has gone from one of the cheapest big silver miners to a momentum story — the stock traded around $5 earlier in the 12-month window and now sits above $20. After that move many investors are rightly cautious. But the recent quarterly results and cash flow cadence give the rally some fundamental legs, and short-term technicals in silver suggest there may be room for the metal - and HL - to run further. That makes HL a tactical long in our view, not a buy-and-forget position.
Our call: upgrade to a tradeable long with two ways to enter (aggressive market entry or conservative pullback entry). Use a hard stop and keep position sizing small-to-moderate given mining volatility. Targets: a near-term target around $25 and a stretch target near $30 if momentum continues.
What Hecla does - and why the market should care
Hecla Mining produces and explores silver, gold, zinc, and other metals across Greens Creek, Lucky Friday, Keno Hill and Casa Berardi. The company generates most revenue from Greens Creek and operates in the U.S., Canada and Mexico. In a market where macro flows into precious metals are a primary driver of share prices, Hecla is a direct play on the direction of silver where a higher metal price drives disproportionate free cash flow and margin expansion for primary silver producers.
Why this matters now: the equity move has been driven by the same macro force that helped other miners - rising precious metal prices and renewed investor interest in hard assets. Hecla’s recent operating performance shows that higher prices are converting into cash flow, not just paper gains.
Hard numbers that support the upgrade
- Q3 FY2025 (period ended 09/30/2025) revenue was $409.54M with operating income of $148.65M and net income of $100.73M. Diluted EPS for the quarter was $0.15.
- Operating cash flow in the same quarter: $148.05M. That is meaningful — it shows the quarter produced real cash after operating costs and supports the company’s financing, dividends and potential capital allocation.
- Balance sheet: total assets of $3.22B and equity of $2.45B with total liabilities of $772.20M. Current assets exceed current liabilities (current assets $387.51M vs current liabilities $179.97M), indicating comfortable near-term liquidity.
- Cash flow from financing in Q3 was negative $253.23M, reflecting the company returning capital / reducing liabilities or other financing activity during the quarter.
- Dividend: Hecla is paying a small quarterly cash dividend (most recent quarterly cash amount: $0.00375 per share) — not material as income but shows management is maintaining a distribution policy.
Put simply: higher realized metal prices are translating to material operating income and strong operating cash flow. That justifies a higher multiple temporarily while markets price in stronger commodity cycles.
Valuation framing
Market snapshot: the stock last traded around $20.25 (most recent trade). Using the diluted share count reported in the quarter (~671.94M diluted average shares), a round estimate market capitalization is about $13.6B (671.94M shares x $20.25 ≈ $13.61B).
Relative to balance sheet equity (~$2.45B at 09/30/2025), that implies a price-to-book of roughly 5.5x. That is a meaningful premium to book and to historical trough levels — the market is pricing in a sustained higher-metal-price regime and continued strong cash conversion.
Do we think that premium is fully warranted? Not for a permanent, multi-year hold without continued metal strength. But for a tactical trade — where you expect more upside from silver momentum and further positive operational surprises — the premium is tolerable if you manage risk closely.
Technical / momentum context (why trade now)
Price action: HL has rallied substantially over the last year (from the low-single digits to $20+), which is consistent with a re-rating driven by the metal cycle. Momentum indicators have been positive and volume has confirmed many of the up-moves (several high-volume up bars in the trailing price history). On a technical pullback, gains have held above prior accumulation ranges in the $12-$16 area multiple times — that’s constructive.
Trade idea (actionable)
We lay out two entry paths based on risk tolerance:
- Aggressive entry (momentum): Buy at market (around $20.25). Stop: $18.00. Targets: $25 (near-term) and $30 (stretch). Rationale: follow through on momentum; a stop at $18 limits downside to ~11% from entry.
- Conservative entry (pullback): Avoid chasing. Buy on a pullback to $19.00 - $19.50 or on a daily close back below $19.50 then scaled in. Stop: $17.50. Targets: $25 and $30. Rationale: improves risk/reward and buys a lower entry without fighting momentum.
Position sizing and risk framing: limit individual trade exposure to 1-3% of account for most retail accounts. With the aggressive plan, a $20.25 entry and $18 stop is ~11% risk per share — size accordingly so that total portfolio risk from a stop hit remains within your risk tolerance.
Example risk/reward (aggressive): entry $20.25, stop $18.00 (risk $2.25 or 11.1%), target $25 (up $4.75 or 23.5% — ~2.1:1 R:R) and stretch $30 (~48% upside or ~4.3:1 R:R). Those are acceptable R:R levels for a swing trade where the thesis is metal-driven momentum.
Catalysts to watch (2-5)
- Silver price direction - the primary macro driver. A sustained move higher in silver will flow through to Hecla’s revenue and cash flow and justify the premium multiple.
- Quarterly updates and production/guidance - continued strong operating cash flow in future quarters will support further multiple expansion or at least justify current levels.
- Exploration and reserve upgrades - any positive findings at Hecla’s assets can improve long-term production profiles and investor sentiment.
- Capital allocation moves - buybacks, increased dividends or debt reduction (management has shown active financing) would be positive if executed while metal prices remain supportive.
Risks and counterarguments
Mining equities are binary around commodity cycles. Below are the key risks and the counterargument we heard internally when upgrading this trade.
- Silver price reversal - If silver corrects materially, Hecla’s valuation can re-rate quickly and produce steep downside. This is the biggest single risk.
- Valuation is stretched - At an implied market cap of ~ $13.6B and P/B ~5.5x, the stock already prices a multi-year recovery. If the rally is short-lived, downside risk is large.
- Operational/production risk - Mines have cost and operational variability. Cost inflation, unplanned shutdowns, or poor grades in a given quarter could compress margins and cash flow.
- Leverage and capital allocation - Hecla has liabilities (~$772M) and noncurrent liabilities of ~$592M. Aggressive financing or disappointing capital allocation (e.g., dilutive financing) would hurt the share price.
- Macro/market liquidity risk - A broad risk-off in markets could take down commodity stocks irrespective of company-level fundamentals.
Counterargument we considered: The company’s fundamental improvement (Q3 revenue $409.5M and operating cash flow $148.0M) and a constructive silver setup mean upward momentum can persist. However, the valuation premium requires active monitoring — this is a tactical trade, not a valuation-driven long-term buy.
What would change our mind
We will re-evaluate the call if any of the following happens:
- Silver price breaks decisively lower on a multi-week basis (clear downtrend and loss of major support levels).
- Hecla reports a quarter with material negative cash flow or operational problems (missed production guidance, major cost overruns).
- Management signals a materially different capital allocation plan that increases leverage or dilutes shareholders.
Conversely, sustained quarter-to-quarter improvement in operating cash flow and confirmed production/guidance increases would make us more constructive and could turn this from a tactical trade into a position idea.
Bottom line / Conclusion
I’m upgrading HL to a tactical long. The move is grounded in numbers: Q3 FY2025 revenue of $409.5M, net income of $100.7M, and operating cash flow of $148.0M show the company is converting higher metal prices into cash. The balance sheet is not stretched; current assets cover current liabilities and the company generates sizable operating cash flow. That doesn’t mean the stock is cheap on a P/B basis — market cap of roughly $13.6B implies investors expect an extended multi-quarter tailwind for silver.
If you agree with that outlook, take a disciplined trade: either a momentum entry near current levels with a defined stop at $18.00, or a conservative entry on pullback to $19.00-$19.50 with a slightly tighter stop at $17.50. Targets: $25 and $30. Size the trade to limit portfolio risk and be ready to exit if silver or Hecla’s operating metrics roll over.
Disclosure: This is a trade idea, not investment advice. Manage position sizes and stops to your risk tolerance.