Silver Wheaton Corp. Should Be a Part of Your Portfolio: Here’s Why

With the price of silver on the rise, many investors are shoring up on silver producers like Silver Wheaton Corp. (TSX:SLW)(NYSE:SLW), and here’s why you should, too.

| More on:
The Motley Fool

Silver Wheaton Corp. (TSX:SLW)(NYSE:SLW) is the largest silver streaming company in the world, with active operations on three different continents.

The price of silver has steadily risen over the past month, prompting investors to take a look at their portfolios and ensure that they are adequately diversified to this fluctuation. Silver Wheaton is one such company that should be considered for inclusion.

Let’s take a look why Silver Wheaton should be a part of your portfolio.

High margin, low risk

Silver Wheaton is a streamer, which basically means it funds mining companies through an upfront payment in exchange for gold and silver by-product, which Silver Wheaton sells at a significant profit. The negotiated price for the mined metal is often significantly less than the market rate.

This is lower risk than investing in the mining company because there is no need to invest in exploration costs or large capital expenditures.

In terms of those high margins, consider this as an example: the operating cost for silver is currently set near US$4.36 per ounce and US$395 per ounce of gold. Putting this into perspective, an ounce of gold on the market currently goes for near US$1,160. Goldcorp Inc., who is often regarded as one of the most efficient companies in the mining business, has a cost of $656 per ounce.

This margin alone makes Silver Wheaton a lucrative opportunity for investors to explore.

Quarterly results are coming next week

Since the beginning of the month, the stock has appreciated by over 10%. Results for the third quarter will be released November 3, and the consensus among analysts is that Silver Wheaton will beat expectations and will have had a very good quarter; a strong buy rating will be put on the stock.

The company has forecasted that production will hit 43.5 million ounces, and of that number, 38% will be attributed to gold. Last year, the number attributed to gold was significantly higher. With the gold market faring better than silver, better-than-expected revenues attributed to gold are not completely out of the question, especially when compared with the same quarter last year.

Looking to the future, the company forecasts that production could hit upwards of 51 million ounces within the next four years, which will push the price of the stock even higher.

Currently, the stock trades at just under $18, and, in my opinion, can be considered a bargain at the current price, particularly for investors looking to diversify their portfolio with a stock that has huge growth potential in the long term.

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 Demetris Afxentiou 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 Investing

Person holding a smartphone with a stock chart on screen
Tech Stocks

Where Will TMX Group Stock Be in 5 Years?

TMX Group (TSX:X) has an extremely good competitive position.

Read more »

how to save money
Energy Stocks

This 7.8% Dividend Stock Pays Cash Every Month

This monthly dividend stock is an ideal option, with a strong base, growing operations, and a strong future outlook.

Read more »

crypto blockchain
Tech Stocks

Best Stock to Buy Right Now: Galaxy Digital or Hut 8 Stock?

Cryptocurrency stocks are roaring, but these two could be your best bets right now.

Read more »

Women's fashion boutique Aritzia is a top stock to buy in September 2022.
Stock Market

Is Aritzia Stock Poised to Become the Next Lululemon?

Lululemon and Aritzia are two retail companies that remain popular among shoppers in 2024. Are the two stocks a good…

Read more »

Tractor spraying a field of wheat
Dividend Stocks

Is Nutrien Stock a Buy, Sell, or Hold for 2025?

Nutrien stock should continue to be a top option for years to come, but only at the right price.

Read more »

Dividend Stocks

The Best Canadian Stocks to Buy With $7,000 Right Now

Three high-yield Canadian stocks are the best buys today, especially for TFSA investors.

Read more »

ways to boost income
Stock Market

The 3 Most Popular Stocks on The TSX Today: Do You Own Them?

The heavy trading volume of three TSX stocks indicate they are popular with Canadian investors.

Read more »

data analyze research
Energy Stocks

The Smartest Dividend Stocks to Buy With $2,000 Right Now

Dividend stocks like Canadian Natural Resources (TSX:CNQ) can amplify your wealth.

Read more »