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Wheaton Shares Up 68% in a Year: What's Driving the Rally?
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Shares of Wheaton Precious Metals Corp. (WPM - Free Report) have rallied 67.7% over the past year, as against the industry’s loss of 10.3%, while the S&P 500 has gained 5.1%. The company’s continued focus on mine expansions, strong financial position and higher gold prices have contributed to this rally.
Wheaton has a market cap of $20.3 billion. The company has an expected long-term earnings per share growth rate of 5%.
Let’s delve deeper and analyze the factors driving the stock.
Driving Factors
Wheaton remains focused on mine explorations and expansion activities. The company expects higher production of silver grade at its Penasquito mine in the current year. At Constancia, Hudbay Minerals Inc. (HBM - Free Report) has secured the surface rights for the Pampacancha deposit and expects to begin mining the satellite deposit late this year. At the Stillwater mine, palladium and gold productions are likely to increase with the continued ramp-up of the mill projects. These projects are anticipated to be growth drivers in the years to come.
The company generates its revenues primarily from the sale of gold, silver and palladium. Gold prices have been up 14.6%, so far this year, fueled by the slowdown in manufacturing activity, rate cuts, geopolitical tensions, and uncertainties related to the coronavirus pandemic. The combination of lower mined gold supply and higher demand, and geopolitical tensions are likely to drive prices north in the days to come. Moreover, silver prices have started to gain momentum, triggered by anticipations of an economic recovery, which will likely revive demand for the white metal given its wide usage of industrial applications.
Furthermore, Wheaton's solid cash position, operating cash flows, combined with available credit capacity of more than $1.1 billion, under the revolving facility of $2 billion, helps the company invest in growth opportunities as well as sustain its dividend policy. These also provide flexibilities to acquire additional accretive precious metals. Moreover, the company’s efforts to reduce its debt levels are encouraging. Also, around 88% of the company’s production comes from lower cost mines with higher margins, which positions it well to sail through the current market conditions.
Positive Growth Projections
The Zacks Consensus Estimate for Wheaton’s 2020 earnings is currently pegged at 91 cents per share, indicating a year-over-year surge of 62.5%. The same for 2021 earnings is pinned at $1.07 per share, suggesting year-over-year growth of 16.9%.
Agnico Eagle has an estimated earnings growth rate of 53.6% for the current year. The company’s shares have rallied 20.6% in the past year.
B2Gold has an expected earnings growth rate of 221.4% for ongoing year. Its shares have surged 80.7% in the past year.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
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Wheaton Shares Up 68% in a Year: What's Driving the Rally?
Shares of Wheaton Precious Metals Corp. (WPM - Free Report) have rallied 67.7% over the past year, as against the industry’s loss of 10.3%, while the S&P 500 has gained 5.1%. The company’s continued focus on mine expansions, strong financial position and higher gold prices have contributed to this rally.
Wheaton has a market cap of $20.3 billion. The company has an expected long-term earnings per share growth rate of 5%.
Let’s delve deeper and analyze the factors driving the stock.
Driving Factors
Wheaton remains focused on mine explorations and expansion activities. The company expects higher production of silver grade at its Penasquito mine in the current year. At Constancia, Hudbay Minerals Inc. (HBM - Free Report) has secured the surface rights for the Pampacancha deposit and expects to begin mining the satellite deposit late this year. At the Stillwater mine, palladium and gold productions are likely to increase with the continued ramp-up of the mill projects. These projects are anticipated to be growth drivers in the years to come.
The company generates its revenues primarily from the sale of gold, silver and palladium. Gold prices have been up 14.6%, so far this year, fueled by the slowdown in manufacturing activity, rate cuts, geopolitical tensions, and uncertainties related to the coronavirus pandemic. The combination of lower mined gold supply and higher demand, and geopolitical tensions are likely to drive prices north in the days to come. Moreover, silver prices have started to gain momentum, triggered by anticipations of an economic recovery, which will likely revive demand for the white metal given its wide usage of industrial applications.
Furthermore, Wheaton's solid cash position, operating cash flows, combined with available credit capacity of more than $1.1 billion, under the revolving facility of $2 billion, helps the company invest in growth opportunities as well as sustain its dividend policy. These also provide flexibilities to acquire additional accretive precious metals. Moreover, the company’s efforts to reduce its debt levels are encouraging. Also, around 88% of the company’s production comes from lower cost mines with higher margins, which positions it well to sail through the current market conditions.
Positive Growth Projections
The Zacks Consensus Estimate for Wheaton’s 2020 earnings is currently pegged at 91 cents per share, indicating a year-over-year surge of 62.5%. The same for 2021 earnings is pinned at $1.07 per share, suggesting year-over-year growth of 16.9%.
Zacks Rank & Other Stocks to Consider
Wheaton currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the Basic Materials sector are Agnico Eagle Mines Limited (AEM - Free Report) and B2Gold Corp (BTG - Free Report) , each carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Agnico Eagle has an estimated earnings growth rate of 53.6% for the current year. The company’s shares have rallied 20.6% in the past year.
B2Gold has an expected earnings growth rate of 221.4% for ongoing year. Its shares have surged 80.7% in the past year.
Zacks Top 10 Stocks for 2020
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2020?
Last year's 2019 Zacks Top 10 Stocks portfolio returned gains as high as +102.7%. Now a brand-new portfolio has been handpicked from over 4,000 companies covered by the Zacks Rank. Don’t miss your chance to get in on these long-term buys.
Access Zacks Top 10 Stocks for 2020 today >>