As a speculator I traded in and out of Wheaton Precious Metals Corporation (WPM) for many years via the stock itself and also through a number of options trades. We first covered this company in a post entitled Silver Wheaton on Tuesday, 11th July 2006, and have penned over 80 articles since then as we were very active traders throughout the bull phase of the precious metals market.
Wheaton Precious Metals Corporation
Formally known as Silver Wheaton Corp back in the day when it focused solely on streaming silver, it is now a household name in the 'streamer' category and derives its income primarily from gold.
Wheaton Precious Metals is one of the largest precious metals streaming companies on the NYSE and currently has streaming agreements for 19 operating mines and 9 development stage projects. It should be noted that having paid an upfront fee many of these streams are for as much as 50 years or the life of the mine. These contracts ensure that there should be a continuous supply of product for the company to sell. The lion's share of these operations are located in Canada, the United States and South America, so baring a revolution they should continue to operate.
The company has a market capitalization of $13.765B and is managed by a staff of only 40 employees which is a considerable achievement. A large mining company of a similar size would need many thousands of employees in order to sustain a market capitalization of that size. In terms of liquidity the average volume of shares traded on a daily basis is 2,764,845 which more than adequate for those who wish to trade this stock on a frequent basis. The 52-week trading range has been from a low of $15.08 to a high of $30.90. Some of these gains are attributable to a resolution being found with the Canadian Tax Authorities in December 2018 causing the stock price to jump to higher ground. Since then of course we have experienced a dramatic rise in the price of both gold and silver in what appears to be the formation of a precious metals bull market. This bodes very well for the company as the delivery price to them is fixed and therefore every price increase on the open market is a benefit in terms of turnover and profit
WPM Chart One Year
A quick look at the chart below depicts the rapid rise of this stock over the course of the last year.
Note that both the 50dma and 200dma are heading north which is a good sign although we wouldn't want the price to get too far ahead of these averages as it could trigger a sell-off as investors try to lock in profits. Also note that the three technical indicators shown; the RSI, the STO and the MACD are all in the overbought zone which suggests that there could be a pullback in the short term.
However, we think that any pullback would be shallow and short lived and should be considered as an even better buying opportunity than it is now.
In the upcoming Bull Market in the precious metals space the streaming companies will do very well and this one is as good as any for a long-term trade.
If you haven't acquired any of the streamers yet than give this company some thought as we are of the opinion that it could hit our target of $100.00 in the next 18 months or so.
Prepare yourself mentally for the corrections which will materialize quickly, but do not be shaken out of your position.
The producers in this space will present many opportunities to trade in and out of them and also to apply some well thought out options strategies, but don't involve yourself if you are not an experienced trader with a cast iron stomach.
As always go gently but make those acquisitions as they say, while these prices last.
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Take good care
Disclosure: I am/we are long WPM. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
Additional disclosure: Disclaimer: www.gold-prices.biz makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents our views and replicates trades that we are making but nothing more than that. Always consult your registered adviser to assist you with your investments. We accept no liability for any loss arising from the use of the data contained on this letter. Options contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. Past performance is neither a guide nor guarantee of future success.