MENU

First Brexit… then Trump… Now, it’s time for Pro

Is your portfolio really prepared for what’s coming next?

To help investors like you navigate this historically uncertain — yet high-flying — market and prepare for an inevitable downturn, we’re re-opening our Motley Fool Pro Canada service to a select few new members for a short time.

To discover how Pro Canada could help you to increase your upside potential… reduce your downside risk… and earn paycheque-like income in the process, simply click here — before the small number of spots we have left are all gone!

Is Goldcorp Inc. or Silver Wheaton Corp. Attractive Today?

Precious metals stocks have pulled back in recent weeks, and investors are wondering which names should be on their radars.

Let’s take a look at Goldcorp Inc. (TSX:G)(NYSE:GG) and Silver Wheaton Corp. (TSX:SLW)(NYSE:SLW) to see if one deserves to be in your portfolio.

Goldcorp

Goldcorp fell out of favour with investors in recent years as falling production, high costs, and weak gold prices forced the company to cut its dividend and launch a restructuring plan.

Management has worked hard to turn the company around, and based on the Q4 2016 earnings report, it looks like things are on the mend.

Goldcorp generated Q4 2016 net earnings of US$101 million, or US$0.12 per share, compared to a huge loss in the same period in 2015.

Better gold prices helped offset another drop in production, but the main story is the improvement in operating costs.

Goldcorp’s Q4 all-in sustaining costs (AISC) came in at US$747 per ounce compared to US$977 per ounce in Q4 2016.

That’s a significant improvement, and the company says more good news is on the way.

Over the next five years Goldcorp expects AISC to fall another 20%. Over that same time frame, production and the company’s resource base are forecast to increase 20%.

Silver Wheaton

Silver Wheaton doesn’t own any mines; it simply provides upfront cash to mining companies to help them move their projects from development to production. In return, Silver Wheaton is given the right to purchase gold or silver produced at the mine for a very attractive price.

How attractive?

In the Q3 2016 report, Silver Wheaton said its average cash costs were US$4.51 per ounce of silver sold and US$390 per ounce of gold sold.

The average realized sale price was US$19.53 per ounce of silver and US$1,336 per ounce of gold, so the margins can be quite impressive.

Why would miners agree to such a deal?

Most of the streaming agreements are negotiated on mines set up to produce base metals such as copper or zinc. The gold and silver are simply by-products.

Is one a better bet?

Owning any stocks connected to gold or silver requires a belief that the precious metals are at the beginning of a new long-term rally.

If you are in that camp, both these companies are attractive picks. At this point, Goldcorp is still out of favour with the market, so there might be a contrarian opportunity in the stock.

For investors who want a way to play both gold and silver without taking on direct risks that come with owning the miners, Silver Wheaton is probably the better bet.

Six "pro" strategies for today's highly uncertain market

Motley Fool Canada's $250,000-real-money-portfolio service, Motley Fool Pro, is currently closed to new members. But lead advisor Jim Gilles is doing something special for investors who are worried about the market and where it will head in 2017.

He's revealing the six strategies he uses in Pro to help members guardrail their portfolios and make money in up, down, and sideways markets.

For a limited time you can download this "Pro 2017 Survival Guide" free of charge by simply clicking here.

Fool contributor Andrew Walker owns shares of Goldcorp. The Motley Fool owns shares of Silver Wheaton. Silver Wheaton is a recommendation of Stock Advisor Canada.

NEW! This Stock Could Be Like Buying Amazon In 1997

For only the 5th time in over 14 years, Motley Fool co-founder David Gardner just issued a Buy Recommendation on this recent Canadian IPO.

Stock Advisor Canada’s Chief Investment Adviser, Iain Butler, also recommended this company back in March – and it’s already up a whopping 57%!

Enter your email address below to claim your copy of this brand new report, “Breakthrough IPO Receives Rare Endorsement.”

I consent to receiving information from The Motley Fool via email, direct mail, and occasional special offer phone calls. I understand I can unsubscribe from these updates at any time. Please read the Privacy Statement and Terms of Service for more information.