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3 Reasons to Buy Silver Wheaton Today

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Historically, tumultuous times offer some of the best opportunities to buy stocks, and the market's recent mess surely qualifies. And though major silver player Silver Wheaton (NYSE: SLW  ) has already more than recovered from the brunt of the recession, many investors expect even better times ahead.

In our Motley Fool CAPS community, about 96% of the 2,001 investors rating the company are bullish, so there's no shortage of reasons why Silver Wheaton will thrive, three of which I've highlighted below.

But here at The Motley Fool, we're all for looking at both the good and bad sides of an investment. Once you're done with this article, you can read the case against the stock, weigh in with your own comments below or rate Silver Wheaton yourself in CAPS.

1. Strong financials
Consistent with peer Silvercorp Metals' (NYSE: SVM  ) and Pan American Silver's (Nasdaq: PAAS  ) record quarterly production numbers, Silver Wheaton hasn't been left out, cranking out its own records in earnings and silver equivalent sales volume in its most recent quarter. And with investments in silver streams from Goldcorp's (NYSE: GG  ) Penasquito mine and Barrick Gold's (NYSE: ABX  ) up-and-coming Pascua-Lama project, investors look for Silver Wheaton's hot streak to continue.

2. Killer business model
While Silver Wheaton doesn't sport negative cash costs for silver production like Silvercorp or Hecla Mining (NYSE: HL  ) , many CAPS members like its alternative approach with a fixed cost structure and reduced downside risk, which leverages the upside of rising silver prices. The company's business model has it sitting on long-term silver purchase agreements with claim to sizable reserves that many investors believe will keep the profits rolling.

3. Long-term silver demand
The ascent of gold and silver prices is resulting in fresh highs for gold miners such as Newmont Mining (NYSE: NEM  ) and creating large inflows of investment in gold and silver exchange-traded funds. While much of the attention toward precious metals is driven by a flight to safety, many investors remain bullish on silver's long-term outlook thanks to its industrial uses that back up its allure as a precious metal. With this, many CAPS members see increasing long-term demand.  

To see details of what CAPS members are saying now about Silver Wheaton, just click on over to Motley Fool CAPS and have a look -- or add your own thoughts directly to this story in the comments box below.

The Motley Fool Stock Advisor service looks for companies with strong management poised to beat the market over the long haul. To see all the stocks that have helped Tom and David Gardner beat the market by 69 points on average, take a free 30-day trial.

Fool contributor Dave Mock has three good reasons to explain the excessive crumbs on the couch. Gosh darn that dog. He owns no shares of companies mentioned here.

True to its name, The Motley Fool is made up of a motley assortment of writers and analysts, each with a unique perspective; sometimes we agree, sometimes we disagree, but we all believe in the power of learning from each other through our Foolish community. The Fool's disclosure policy won't accept rubber stamps.

Read/Post Comments (1) | Recommend This Article (11)

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  • Report this Comment On September 24, 2010, at 10:32 AM, outoffocus wrote:

    Why can't these two articles be combined into one? Now you are just confusing people. I think investors should have to whole picture in order to make an informed decision.

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