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Why Silver Wheaton, Spirit Airlines, and Cabela's Jumped Today

By Dan Caplinger - Apr 19, 2016 at 5:15PM

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The market didn't move much, but these stocks climbed substantially. Find out why.


Image: Silver Wheaton.

After posting a strong advance on Monday, the market largely paused on Tuesday, and investors were content with modest advances that pushed the Dow further above the 18,000 mark and sent the S&P 500 above 2,100 for the first time all year. Technology companies weighed on the market, and that helped send the Nasdaq down from Monday's closing levels. Market commentators continue to point to the ongoing rush of earnings reports and worldwide macroeconomic data releases and their conflicting stories about the overall market, but investors are pleased about the market's resilience in the aftermath of the declines it suffered at the beginning of 2016. Helping to lead the market higher on Tuesday were Silver Wheaton (WPM 0.38%), Spirit Airlines (SAVE 13.49%), and Cabela's (CAB), all of which posted sizable gains on the day.

Silver Wheaton gained 9% on a strong day for the precious metals markets. Gold gained almost $20 per ounce to climb above the $1,250 level, and silver made an even more impressive move of nearly 5%, gaining $0.75 to finish at $16.95 per ounce. As a precious-metals streaming company, Silver Wheaton doesn't have direct exposure to the risks of mining operations, but it has suffered indirectly as a result of its partners having made decisions to cut production. Silver Wheaton therefore has a lot to gain from a rebound in gold and silver prices, and its recent decisions to seek capital infusions in order to provide more financing to struggling mining companies has raised the stakes for its future. Tuesday's rise reflects the importance of a silver-market recovery for Silver Wheaton, and if this is indeed the bottom of the downturn in the commodities markets, then the stock could have a lot further to rise.

Spirit Airlines picked up altitude, climbing 6% after providing an investor update on its first-quarter guidance. The airline said that it expected its operating margins to come in at around 21.5%, which was better than its previous range of 19% to 20.5%. Spirit said that revenue has proven to be better than it originally expected, and even a one-time incentive payment related to labor negotiations wasn't enough to keep its costs per available seat mile to fall for the quarter. Even though total revenue per available seat mile is expected to fall 14%, that was less extreme than the company had looked for previously, and that could point to continued success for the discount airline even as the competitive environment starts to present more challenges to Spirit Airlines.

Finally, Cabela's also finished the day up 6%. The sporting goods store chain was the subject of reports of takeover interest from privately held peer Bass Pro Shops and a Wall Street private equity investor. Cabela's has been looking at strategic alternatives since December that many have speculated could include the possibility of an outright sale of the company, and activist investors have pushed Cabela's to take action to enhance shareholder value. With the potential for other interested parties to get involved in bidding for the company, Cabela's investors are in the comfortable position of waiting to see just how much a prospective buyer like Bass Pro Shops might be willing to pay for their shares.

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Stocks Mentioned

Wheaton Precious Metals Corp. Stock Quote
Wheaton Precious Metals Corp.
WPM
$39.81 (0.38%) $0.15
Spirit Airlines, Inc. Stock Quote
Spirit Airlines, Inc.
SAVE
$19.27 (13.49%) $2.29
Cabela's Incorporated Stock Quote
Cabela's Incorporated
CAB

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

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