Tuesday, March 20, 2012

Let's Get Back Into This Silver Stock

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ITZ favorite silver play, Silver Wheaton (SLW) is back on the BUY Radar after having exited recently at $37 read.

They report Q4 earnings after the close this Thursday the 22nd of March. Street consensus for quarterly earnings is $0.42, with $0.37 low & $0.48 on the high side. FY 2011 should come in at $1.62.

FY 2010 eps $0.42;  FY 2011 est  $1.62 & FY 2012 est $2.18

At $33 Silver Wheaton is trading at 15xs 2012 estimated earnings, which ITZ believes a low valuation and a buy. As of December 31, 2010, Silver Wheaton had 14 long-term silver purchase agreements. Under these agreements, the company has the right to buy all or part of the silver production at a low fixed cost. So, beyond that initial investment, it is like growth without ongoing capital expenditures that can be used to hedge its own silver production. The company also has two long-term precious metal agreements similarly structured.

Silver Wheaton drew from 16 different mines in 2011 and it is expected to bring at least three more mines into production soon. read

On the daily chart SLW's Relative Strength (RSI) and Full Stochastic are giving an over sold reading. In the past this has proven to signal taking a position in SLW. ITZ suggests taking a 1/4 position here at $32.50. legging in again (1/4 position) under $32. Then waiting for the earnings report later this week to add to the position.

SET STOP @ $29.50


itzstockchartz said...

Silver Wheaton (SLW.TO) reported on Thursday a 20 percent rise in profit, helped by increased selling prices of silver and gold.

Fourth-quarter earnings rose to $144.7 million, or 41 cents a share. That compared to adjusted earnings of $120.7 million, or 35 cents a share in the year-ago quarter.

Revenue rose 28 percent to $191.9 million, as the mining company sold 5.8 million ounces of silver.

itzstockchartz said...

NOTE as indicated on post ITZ suggested entering another 1/4 position under $32. ITZ did so today @ $31.95. Looking to add more after tomorrow's conference call...follow on Twitter for updates.