Silver Wheaton has shown some recovery by bouncing around 13% from recent lows of $21.80 made on April 18. This bounce is much less than several other companies in the precious metals sector which have gained nearly 20-25% after hitting lows in middle of April. Luckily, the important levels have held and the stock seems to be consolidating. However, there is a direct co-relation with the prices of Silver, and the stocks fortunes may fluctuate pretty quickly. On can trade / invest with a strict stop loss below the recent lows. Analysts are bearish on the sector, and Credit Suisse had lowered the price target of Silver Wheaton to $38. Fundamentally, the performance of the company has been good. In Q4'12, the company had reported growth of nearly 50% and 23% in revenue and net income on a YoY basis. Even sequentially, the revenues and net income had grown by 78% & 48% respectively. The streaming business model gives it great profit margins (~69% in 2012), and the P/E of around 15 make it appear attractive at current levels. Though, further fall in silver prices may affect the margins and there is also a risk of default / stopping production from the mines, Silver Wheaton is still expected to remain comfortably placed due to the diversity of its assets. The low level of debt and $778 million cash (revenue of $850 million) makes its balance sheet appear even stronger. It may be a good time to put its cash to use by getting more contracts at low valuations. Development stage companies in Silver / Gold sector are available at discount to potential. Companies like Pershing Gold Corporation (PGLC) (likely to start production in 2014) are also on the lookout for partners to fund their development projects. A recent article on seekingalpha has been positive on Silver Wheaton stating that it is a relatively lower risk and high reward bet. Let us see how the next earnings pan out.
Very nice to read an informative post; please stick around. There are so many ID's who come here to disrupt, misinform and litter--with the ultimate goal of moving meaningful posts down and off the page. This is a thankful bump!