Wheaton Precious Metals (WPM) is aiming to be the top play for those wanting exposure to precious metals, explains Mike Cintolo, growth stock specialist and editor of Cabot Top Ten Trader.
Like a couple of peers it doesn’t operate any mines — instead, the firm focuses on streaming deals with mines, which get funding early on to ramp up production, in exchange for delivering (for a set, low price, currently around $415 per ounce of gold and under $5 per ounce of silver) a certain percentage of a mine’s gold, silver and/or other output to Wheaton.
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The company has streaming deals with 23 mines in total (including many still in the development stage), but it gets most of its output from eight mines.
The company is aiming to grow both organically (as these mines expand operations) and via acquisition (it announced three new deals last year, including one with Stillwater that brings in palladium and its first foray into a cobalt mine, too).
Obviously, precious metals prices are a big factor here and the reason why sales and earnings slipped last year despite higher streaming totals.
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But, with a looser Fed, prices may head higher, and Wheaton thinks output is headed up as well — it expects total production to tick up 7% this year and thinks the next five years will average 16% higher production levels than 2018.
Throw in a modest dividend (1.5%), the fact Q4 results easily topped expectations and the firm putting a Canadian tax dispute behind it, and there’s reason to think buyers will remain interested.
From $31 in August 2016 to $15 last November, WPM had a rough go of it in recent years. The stock initially got going in December after the tax dispute was settled, and has been acting well since, reaching $22 in February, resting near its 25-day line for a couple of weeks and then coming alive on big volume after the Q4 report. If you want in, we suggest aiming for dips.
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