Silver Wheaton Is a Great Opportunity

Silver Wheaton Corp. (TSX:SLW)(NYSE:SLW) is a low-risk, high-margin stock with huge potential that should be in every portfolio.

| More on:
The Motley Fool

When it comes to silver-streaming companies, there is no company with a larger footprint than Silver Wheaton Corp. (TSX:SLW)(NYSE:SLW).

With active operations on three different continents and growing revenues, Silver Wheaton has perfected the silver-streaming model.  Here’s a few reasons why it really should be in your portfolio.

Low risk

Let’s start off by looking at what Silver Wheaton is–a streamer. This basically means that Silver Wheaton funds a mining company to mine the silver, and then it buys the metal at a negotiated price that is typically significantly lower than market rate.

From a risk perspective, Silver Wheaton’s risk ends at the initial investment. The company does not need to invest in costly exploration initiatives or provide machinery and staffing to mine the metal. Large capital expenditures are effectively minimized through this unique business model.

High margin

When a mining company produces the precious metal, it can be sold to the streaming company at a reduced rate. But how reduced is that rate? Let’s look at an example.

From an operations standpoint, silver costs roughly US$4.36 per ounce, and gold comes in higher at US$395 per ounce. Considering that the spot price for silver is nearly US$15 per ounce and gold is roughly US$1,100, the lucrative potential in this model starts to set in.

This one factor alone makes Silver Wheaton not just a great, but lucrative opportunity for investors.

Huge market potential

Silver Wheaton is forecasting growth that will see production increase from 44.5 million silver equivalent ounces this year to upwards of 55 million within the next four years.

Even with these additional opportunities that are already funded, the cost structure remains largely fixed. This means that once silver prices start to improve as many speculate, this will translate into greater revenues for the company.

Beyond making silver coins and bars, which is growing in demand, silver is also used in an increasing number of applications. One such application that is gaining in significance is use in solar power. The metal is one of the most efficient forms on conduction on the planet, and is used as the conduit in solar-power systems.

Silver Wheaton currently trades just below $18. The stock is up by 18% in the past three months, but is down by 24% year-to-date, making the current reduced price a real bargain for investors looking to diversify their portfolio or looking for long-term growth.

Fool contributor Demetris Afxentiou has no position in any stocks mentioned. The Motley Fool owns shares of Silver Wheaton. (USA). Silver Wheaton is a recommendation of Stock Advisor Canada.

More on Metals and Mining Stocks

woman gazes forward out window to future
Metals and Mining Stocks

A Cheap, Safe Dividend Stock That Retirees Should Know About

Thor Explorations pays growing dividends, holds $137 million in cash, and is building a second mine. Here's why retirees should…

Read more »

Nurse talks with a teenager about medication
Metals and Mining Stocks

The Very Best Canadian Stocks to Hold Forever Inside a TFSA

Looking for Canadian stocks to hold forever in your TFSA? CareRx and Elemental Royalty offer rare combinations of growth, income,…

Read more »

dividend growth for passive income
Metals and Mining Stocks

1 Top Growth Stock to Buy in March

First Quantum Minerals is one of the most compelling copper growth stocks on the TSX right now. Here's why it…

Read more »

panning for gold uncovers nuggets and flakes
Metals and Mining Stocks

Invest $5,000 in This Dividend Stock for $145.75 in Passive Income

See how Lundin Gold's dividends can transform your investment strategy with substantial returns during gold rallies.

Read more »

Paper Canadian currency of various denominations
Dividend Stocks

3 Canadian Stocks That Are Winning as the Loonie Falters

When the loonie weakens, TSX winners are often companies with U.S.-dollar revenue and costs that don’t rise as fast.

Read more »

builder frames a house with lumber
Dividend Stocks

2 Canadian Stocks Built to Be TFSA Cornerstones Through a Volatile Market

A TFSA cornerstone should be something you can hold for years because the business keeps earning through good markets and…

Read more »

woman checks off all the boxes
Dividend Stocks

3 Canadian Stocks for Investors Who Want Income Now and Growth Later

With the right stocks, it's possible to get paid today and still grow your wealth.

Read more »

stocks climbing green bull market
Metals and Mining Stocks

The Best Canadian Stocks to Target for Growth in 2026

Trilogy Metals and ZenaTech are two Canadian growth stocks built for 2026. Critical minerals and AI drones are driving serious…

Read more »