Why Silver Wheaton Corp Is Poised to Hit $35

Silver Wheaton Corp. (TSX:SLW)(NYSE:SLW) deserves a permanent place in your portfolio.

| More on:
The Motley Fool

I want to tell you a story about cunning, huge growth, and angry mutant sharks. On the way, you’ll find the most insanely cheap stock I know.

Streaming metal companies have swept through the mining sector, becoming the main source of cash for new projects. Silver Wheaton Corp (TSX: SLW)(NYSE: SLW) started this shift years ago, and remains almost unrivaled at the top of this industry.

But the stock is about as popular as the Koch brothers at a Greenpeace rally. In the last three months, shares have lost 25% of their value. The stock has lagged, not only the market as a whole, but most of its peers, too.

Company

3-Month Price Change

Market Capitalization

Trailing P/E Ratio

Silver Wheaton Corp

(25%)

$8.0B

22

Royal Gold Inc

(12%)

$4.8B

69

Goldcorp Inc

(15%)

$21.3

N/A

Barrick Gold Corp

(24%)

$17.6B

N/A

Source: Google Finance

Several of these stocks look good today. But not one can match the upside I see in Silver Wheaton. Let me show you three things Mr. Market forgot when it comes to this firm.

1. Mr. Market forgot about growth

The price for any stock must take growth into account. But Silver Wheaton is priced as if it already ran out of room to grow.

Last year, the firm’s producing streams generated 36 million silver equivalent ounces. By 2018, the street projects that figure will nearly double. At those rates, Silver Wheaton will be gushing cash flow.

2. Mr. Market forgot about moats

Silver Wheaton has built a moat around its business a mile wide and filled with killer sharks with laser-beams in their heads. The firm is the biggest streaming metals financier in the world. That gives it credibility as a source of funds.

If you’re a struggling miner, doing a deal with Silver Wheaton is a giant “all clear” signal to other investors. You could almost call it a brand. While Silver Wheaton isn’t selling soda, this brand strength allows the firm to earn thick returns for its shareholders.

3. Mr. Market forgot about the smart money

I’m not the only one who likes this name. The world’s smartest investors are also bullish. George Soros bought a US$10 million stake. A number of other stock sharks – such as Eric Sprott, Mark Coe, and Ray Dalio – have also been buying up shares.

There’s so much more to this stock: the growing dividend, a bright outlook for silver, etc. To top it all off, last quarter the firm posted net profit margins over 40% in spite of the wacky metals market. Just think what it could do in a good year.

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Robert Baillieul 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

Hand arranging wood block stacking as step stair with arrow up.
Metals and Mining Stocks

2 TSX Commodity Stocks With Massive Upside Thanks to Gold Bugs and the Battery Boom

Investing in mining stocks such as Barrick Gold and Lithium Americas can help you benefit from rising commodity prices.

Read more »

Safety helmets and gloves hang from a rack on a mining site.
Metals and Mining Stocks

Why Shares in This Leading Mining Stock Soared 21% in May

This gold stock has risen higher on the back of gold prices, sure, but there's even more driving shares this…

Read more »

stock market
Metals and Mining Stocks

Is Barrick Gold Stock a Buy in 2024?

Barrick Gold (TSX:ABX) is often regarded as one of the best precious metal stocks to own. But should you buy…

Read more »

sale discount best price
Metals and Mining Stocks

3 Cheap TSX Stocks to Buy Right Now

TSX stocks such as Barrick Gold and two others are trading at a cheap multiple and at a discount to…

Read more »

A miner down a mine shaft
Metals and Mining Stocks

3 Copper Stocks to Buy as the Commodity Continues to Soar

Are you looking to get in on the growth of copper stocks? These are the biggest heavy hitters out there…

Read more »

Hands holding trophy cup on sky background
Metals and Mining Stocks

The Best Gold Stock to Invest $1,000 in Right Now

Agnico-Eagle Mines is my favourite gold stock to own, due to its low-risk profile and strong dividend history.

Read more »

Diggers and trucks in a coal mine
Metals and Mining Stocks

1 Canadian Mining Stock Worth a Long-Term Investment

Cameco (TSX:CCO) stock could be a great long-term investment for Canadian growth seekers.

Read more »

STACKED COINS DEPICTING MONEY GROWTH
Stocks for Beginners

Got $200? 1 Copper Stock to Buy and Hold Forever

This copper stock is worth its weight in gold. Or actually, in copper! Given that the price of the material…

Read more »