By Michael Cintolo, Editor of Cabot Market Letter and Cabot Top Ten Weekly
From Cabot Wealth Advisory 10/14/10 Sign up for free Cabot Wealth Advisory e-newsletter
The rally that began on September 1 continues to look good, though there’s clearly some rotation going on underneath the surface. Last week, most stocks related to the cloud computing movement topped out, at least in the intermediate-term. That’s not to say all those names are going to zero, but at the very least, cloud stocks are going to have to take a few weeks, if not months, to rebuild some bases.
My point here is that, even though we’re in a general bull trend, you don’t just buy stocks and sit on them for six months. You must monitor your holdings, especially as earnings reports start coming out. And the plan is relatively simple—get rid of any stocks that break down, take a few profits (or partial profits) on the way up, and always be on the lookout for new leadership stocks at logical buy points.
One way to find new buy candidates is to identify already-strong stocks that don’t report earnings for a few weeks that have tightened up ... a sign that big investors aren’t unloading shares despite the recent run-up. One idea on that front is Silver Wheaton (SLW), part of the super-strong precious metals group. The stock recently marched higher an impressive 11 weeks in a row on big volume. Sales and earnings growth are huge, and the stock has been chopping around the 26-to-28 area for three weeks. A shakeout down to 25, or another week or two in this range, could present a new buy point.
Michael Cintolo
Vice President of Investments and Editor of
Cabot Market Letter and
Cabot Top Ten Weekly
A growth stock and market timing expert, Michael Cintolo is editor of Cabot Market Letter and Cabot Top Ten Weekly. Since joining Cabot in 1999, Mike has uncovered exceptional growth stocks and helped to create new tools and rules for buying and selling stocks. Perhaps most notable was his development of the proprietary trend-following market timing system, Cabot Tides that has helped Cabot place among the top handful of market-timing newsletters numerous times.
By J. Royden Ward, Editor of Cabot Benjamin Graham Value Letter
From Cabot Wealth Advisory 9/20/10 Sign up for free Cabot Wealth Advisory e-newsletter
Silver Wheaton (SLW), based in Vancouver, purchases 15 million ounces of silver annually from mines in Mexico, Portugal, U.S.A., Peru, and Argentina. The company does not own or operate any silver mines, but purchases silver produced as a by-product of gold mining. SLW pays less than $4.00 per ounce of silver from gold miners such as GoldCorp.
Silver Wheaton owns purchase agreements on proved and probable silver reserves of about 275 million ounces. The company has aggressively contracted for additional silver sources recently.
Silver Wheaton contracts are immensely profitable and will produce rapid revenue and earnings growth well into the future. Sales soared 132% and EPS increased 125% during the 12 months ended 6/30/10. We expect sales to increase 39% and EPS 57% to 0.85 during the next 12 months. SLW’s price to earnings ratio of 29.1 times our 12-month forward EPS is high by some standards, but more than fair considering Silver Wheaton’s prospects. The company pays no dividend.
I will continue to follow Silver Wheaton and other Canadian companies in my Cabot Benjamin Graham Value Letter. My next issue, coming soon, will focus on undervalued Canadian stocks. I hope you won’t miss it!
J. Royden Ward
Editor of Cabot Benjamin Graham Value Letter
A lifelong investment professional, J. Royden Ward applies his 40 years of investment research, portfolio management, writing and publishing experience to his role as analyst and editor of Cabot Benjamin Graham Value Letter, which is directed to long-term investors seeking a guide to profitable value investing based on the time-tested systems originally developed by Benjamin Graham, the Father of Value Investing. A second-generation disciple of Benjamin Graham, Roy in 1969 pioneered the development of a computerized model that applied the formulas developed by Graham using a unique ranking system. Today, Roy applies his system to two models in the Value Letter.