Strong On High Relative Volume: Silver Wheaton (SLW)

Editor's Note: Any reference to TheStreet Ratings and its underlying recommendation does not reflect the opinion of TheStreet, Inc. or any of its contributors including Jim Cramer or Stephanie Link.

Trade-Ideas LLC identified Silver Wheaton ( SLW) as a strong on high relative volume candidate. In addition to specific proprietary factors, Trade-Ideas identified Silver Wheaton as such a stock due to the following factors:

  • SLW has an average dollar-volume (as measured by average daily share volume multiplied by share price) of $132.6 million.
  • SLW has traded 811,683 shares today.
  • SLW is trading at 2.98 times the normal volume for the stock at this time of day.
  • SLW is trading at a new high 5.02% above yesterday's close.

'Strong on High Relative Volume' stocks are worth watching because major volume moves tend to indicate underlying activity such as M&A events, material stock news, analyst upgrades, insider buying, buying from 'superinvestors,' or that hedge funds and momentum traders are piling into a stock ahead of a catalyst. Regardless of the impetus behind the price and volume action, when a stock moves with strength and volume it can indicate the start of a new trend on which early investors can capitalize. In the event of a well-timed trading opportunity, combining technical indicators with fundamental trends and a disciplined trading methodology should help you take the first steps towards investment success.

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More details on SLW:

Silver Wheaton Corp. operates as a precious metals streaming company worldwide. The company has 20 long-term purchase agreements and 1 early deposit long-term purchase agreement associated with silver and/or gold relating to 24 different mining assets. The stock currently has a dividend yield of 1.1%. SLW has a PE ratio of 32.0. Currently there are 10 analysts that rate Silver Wheaton a buy, no analysts rate it a sell, and 2 rate it a hold.

The average volume for Silver Wheaton has been 5.8 million shares per day over the past 30 days. Silver Wheaton has a market cap of $7.8 billion and is part of the basic materials sector and metals & mining industry. Shares are up 6% year-to-date as of the close of trading on Wednesday.

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TheStreetRatings.com Analysis:

TheStreet Quant Ratings rates Silver Wheaton as a hold. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including feeble growth in the company's earnings per share, deteriorating net income and premium valuation.

Highlights from the ratings report include:
  • SLW's debt-to-equity ratio is very low at 0.28 and is currently below that of the industry average, implying that there has been very successful management of debt levels. Along with this, the company maintains a quick ratio of 15.20, which clearly demonstrates the ability to cover short-term cash needs.
  • Net operating cash flow has slightly increased to $120.38 million or 1.43% when compared to the same quarter last year. In addition, SILVER WHEATON CORP has also vastly surpassed the industry average cash flow growth rate of -55.16%.
  • SLW, with its decline in revenue, slightly underperformed the industry average of 3.0%. Since the same quarter one year prior, revenues slightly dropped by 0.3%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
  • SILVER WHEATON CORP has experienced a steep decline in earnings per share in the most recent quarter in comparison to its performance from the same quarter a year ago. Earnings per share have declined over the last two years. We anticipate that this should continue in the coming year. During the past fiscal year, SILVER WHEATON CORP reported lower earnings of $1.05 versus $1.65 in the prior year. For the next year, the market is expecting a contraction of 26.7% in earnings ($0.77 versus $1.05).
  • The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Metals & Mining industry. The net income has significantly decreased by 94.2% when compared to the same quarter one year ago, falling from $77.06 million to $4.49 million.

STOCKS TO BUY: TheStreet Quant Ratings has identified a handful of stocks that can potentially TRIPLE in the next 12 months. Learn more.

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