Will Silver Wheaton Shine Brighter in the Second Half?

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With half of 2012 in the record books, it's important to take a look at whether the stocks that interest you can live up to their full potential. By making sure you know about a company's future plans and possible challenges, you can make a better decision about whether it's a smart investment for your portfolio.

Today, let's take a look at Silver Wheaton (NYS: SLW) . As we saw in our look at Silver Wheaton last month, weak silver prices have held back the shares of the silver-streaming company. But the company has some opportunities to profit no matter which way the white metal's price moves in the near future. Let's take a quick look at Silver Wheaton's prospects for the rest of the year and beyond.

Stats on Silver Wheaton

Average Stock Price Target$43.23
2012 EPS Estimate$1.75
2013 EPS Estimate$2.18
2012 Sales Growth Estimate13.1%
2013 Sales Growth Estimate20.5%
CAPS Rating (out of 5)****

Source: Yahoo! Finance.

What will the rest of 2012 bring for Silver Wheaton?
Many investors tend to focus solely on Silver Wheaton's exposure to silver bullion prices. Certainly, when you look at how the company's shares have performed in comparison to iShares Silver Trust (NYS: SLV) , the similarities are striking:

SLV Total Return Price Chart

SLV Total Return Price data by YCharts.

But the future prospects of Silver Wheaton go well beyond those of silver prices. Consider:

  • As stream partners Eldorado Gold (NYS: EGO) , Barrick Gold (NYS: ABX) , and Goldcorp (NYS: GG) start to ramp up production on some of their most promising mines, Silver Wheaton's revenue can increase even if silver prices stay constant.
  • With nearly $1 billion in net cash, Silver Wheaton has the opportunity to make additional streaming deals. With many miners in financial difficulties, Silver Wheaton has leverage to make lucrative arrangements to provide them with the cash they so desperately need, especially in the face of rising capital costs of developing mining projects.

In essence, investors could find themselves in a no-lose situation. If silver prices rise, Silver Wheaton should follow suit. But even if prices fall, taking the stock down with it in the short run, it would set the stage for Silver Wheaton to improve its results whenever the next bull market comes for the metal.

I made a positive CAPScall on the stock when I looked at it last month, and even though it's down a few points, I'm not wavering in my belief in its long-term ability to beat the S&P 500. Even if the stock price stays depressed, Silver Wheaton is setting the stage for more powerful growth than ever.

Silver Wheaton has some interesting prospects, but it's not the only promising play on precious metals out there. Read The Motley Fool's latest special report on gold to discover the tiny gold stock digging up massive profits. It's free, but only available for a limited time.

Click hereto add Silver Wheaton to My Watchlist, which can find all of our Foolish analysis on it and all your other stocks.

At the time this article was published Fool contributor Dan Caplinger doesn't own shares of the companies mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Fool has a disclosure policy.

Copyright © 1995 - 2012 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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