1. Great Panther Silver (NYSEMKT:GPL)

As I mentioned in a Nov. 5 article, I'm buying shares of Great Panther Silver following its latest quarterly results. Why? The company is firing on all cylinders: a 21% jump in total metal production plus a 32% decrease in all-in sustaining costs led to a really strong third quarter. This led to revenue of $16.8 million (31% increase) and operating cash flow of $1.6 million.

What's more: Great Panther has one of the strongest balance sheets in the silver sector, despite its small size: the company ended last quarter with $18.7 million in cash and equivalents, down just slightly from last quarter despite spending $2.1 million on exploration this past quarter. As of Sept. 30, 2015, the company had net working capital of $34.7 million, compared to $32.9 million a year ago, an increase of $1.78 million.

Shares also look pretty cheap in my opinion. With a market cap of $66.69 million and $18.7 million in net cash, the company has an enterprise value of $47.99 million; with $10 million in annual cash flow, shares trade at an EV/CashFlow ratio of just 4.79.

Meanwhile, the company has a really strong project pipeline, with the early-stage exploration Santa Rosa property, the advanced stage exploration Horcon property, and an option on the Guadalupe De Los Reyes and Coricancha properties.

Great Panther is a low-cost silver producer that has strong leverage to silver prices, no debt and a strong cash position, and carries significant long-term growth potential with its exploration and advanced-stage properties. I see it as a strong takeover target for a larger silver miner (such as First Majestic). That's why it's my #1 overall silver stock pick for 2016.