Wheaton Precious Metals Corp (WPM)

[investora2z]

The recent lows have been providing support to gold and silver companies. If the overall market starts to correct, then things may become a little uncertain. If the recent lows of gold and silver continue to hold, then streaming companies like Silver Wheaton will benefit pretty quickly. On the upside, levels beyond $25 will not be achievable unless silver does a decisive turnaround. The analysts continue to remain bearish on these companies. The recent Q1'13 results were below analyst estimates as the net income declined by more than 9%. Even the revenues did not grow much on a YoY basis. In Q4'12, the company had done much better with nearly 50% growth in revenues and 23% growth in net income. Sequentially, the revenues declined by ~29% and net income fell by nearly 25%. While nothing great was expected from the results, such numbers do reflect the fundamental position of the sector. This puts additional pressure to keep the stocks subdued. The company has used its cash to fund the acquisition of gold streams of Vale's Salobo mine in Brazil and Sadbury mines in Canada. These acquisitions are increasing in the sector as these depressing times have provided opportunities to buy good gold and silver assets at cheap valuations. Development stage companies like Pershing Gold Corporation (PGLC), which is about to start production in a few quarters, are available at a significant discount. Silver Wheaton is operating in a low risk model and the margins of the business are high. In case silver stabilizes, the stock has the potential to rebound strongly. Most gold and silver company stocks have started to show that the recent lows may be a good entry point, at least for trading the range at the extremes. But the stop losses have to be strict.