NEW YORK ( TheStreet) -- Which silver mining stock will outperform its peers and the metal in 2011? According to investors polled by TheStreet, that answer is clear: Silver Wheaton ( SLW). More than 50% of the votes went to Silver Wheaton, according to a poll by TheStreet.
CDE) came in second place, with 25.7% of the votes. The other contenders were Pan American Silver ( PAAS) and Goldcorp ( GG), which tied with 5.4% of the votes; and Silver Standard ( SSRI) and Minefinders ( MFN), which received 6.1% and 6.4% of the votes, respectively. Silver Wheaton's core approach lies in buying already-excavated ores from miners, then extracting silver from it. The company's portfolio includes silver streams from Goldcorp's Peñasquito mine in Mexico and Barrick's ( ABX) Pascua-Lama project, spanning the border of Chile and Argentina. According to Morningstar data, Silver Wheaton obtains a share of mines' silver output at fixed price of about $3.90 a silver ounce. The purchase price compares favorably to recent silver prices when subject to inflationary adjustments, according to Morningstar. Silver Wheaton's unique approach to the silver mining business is what fuels the bullish view of the stock. "The company's unique structure acts as a paper proxy for unhedged silver prices," Morningstar analyst Joung Park said in an analyst report. "This investment serves asset allocators seeking alternative investments."
Like many analysts, Park agrees that the company's long-term silver purchase contracts with a dozen silver mines across the world helps to minimize operational and geopolitical risks. He adds that the company has no obligation to operate these mines or put in any additional cash besides its initial investment. Despite his overall positive view about Silver Wheaton, Park says that the deep ties of the company's fortunes to the volatile silver prices have made him somewhat cautious.
-- Written by Andrea Tse in New York. >To contact the writer of this article, click here: Andrea Tse. >To follow the writer on Twitter, go to Andrea Tse. >To submit a news tip, send an email to: email@example.com.
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