SilverWheaton my 3rd pick Silver Wheaton is large I agree and fairly advanced in it's developement. But. but, but. You have to look at the bigger picture and you might see why I am buying this stock along with SSL and SND at a 33% ratio.
This is why Im buying SilverWheaton:
They are currently streaming 25 million ounces per year at 4$/ounce cost. So that's a revenue of 750 million in 2012 with an assumed avg. silver price of 34$. With fairly low overhead compared to a traditional mine. So share price now of roughly 40$/share. So keep this in mind.
So they are predicting that they will be producing between 50-75million ounces a year by 2016. So let's try and put this in perspective.
If the price of silver avg's 55$/ounce by 2016 wich I think is very probable and likely if you follow the trend and the Money printing forever in the world. you have a possible of revenue of
$2.5 billion per year.at 50 million ounces a year with 55$/ounce silver. That's a 3.33X increase in revenue in this scenerio. This is assuming that silverwheaton does no new acquisitions for the next 4 years. That is very unlikely considering they keep 1 billion dollars cash on books with no debt.
Now the dream scenerio would be if they produced 75 million a year with a silver price of 80$/ounce with a cash cost of 7$/ounce. So the revenue would be 5.47 billion a year. vs 750 million today. So that is an increase of 7.29X revenue today.
So my thinking is that they have the potential of increasing revenue 3-7 fold over the next 4 years. So what does this mean to the stock price and dividend? IMO Im looking at a 200$/share stock price and a dividend of 2% at that level. Silver is a more leveraged play then gold. I like the dividend. And I think they are predicting lower then what they will achieve. And the wild card... What if silver took off.. Really took off. 100$/ounce or higher. ???? In my opinion Sandstorm gold and sandstrom energy and metals have more potential for a 7-12 bagger. But slw is alot safer and gets almost the same job done. With ALOT less risk. I love all three stocks. I just wanted to show my rationale for picking SLW as my 3rd pick.