The recent article on seekingalpha.com has given a thumbs up to Silver Wheaton. The analysis ultimately concludes that the stock has relatively lower risk due to its business model and the diversity of its assets. The analyst has recommended an overweight stance if the stock corrects to $22. This level is the 52 week low made by the stock. It has since bounced by 13% from those levels, and is looking relatively stable. Other companies in the sector have shown stronger rebounds. Many have bounced from levels which were close to the lows of 2008, and a much deeper cut has been avoided. Of course, the fortunes may change pretty quickly if the silver goes into another leg of decline. The most likely scenario is that the stocks my consolidate at current levels and remain in a range. Lower levels can be bought, but one has to remain careful with a stop loss in mind. The good part is that too many analysts are now bearish on the sector. This is usually the best time to start becoming positive. For Silver Wheaton, the price targets of these analysts are significantly higher than the current levels (e.g. Credit Suisse PT of $38). This is because the high margins, and low risk business model of Silver Wheaton makes it a preferred bet in the current scenario. It is a near zero debt company with $778 million in cash. With depressed prices of stocks, especially of development stage companies, it may be good time to invest in some silver / gold assets. Companies like Pershing Gold Corporation (PGLC) (likely to start production in 2014) are looking for investors to fund their endeavors. Contracts may be available at good terms. Silver Wheaton can look for such assets in the Silver sector. The company has maintained its growth and it remains to be seen what happens in the next earnings.
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