Wheaton Precious Metals (TSX:WPM)(NYSE:WPM) is an intriguing safe investment that is often bypassed by many investors. At first glance, Wheaton may appear to be like any other traditional precious metal miner, but the company is a streamer.
What’s a streamer? Why does it matter?
Streamers differ from traditional miners in that they don’t actually own or operate any mines. Streamers provide upfront financing to traditional miners, who will use that injection to get the mine operational.
In exchange for that upfront capital, streamers are entitled to purchase metals extracted from the mine at a discounted rate. That discounted rate can be substantial — as low as US$4.50 per ounce of silver and US$450 per ounce of gold.
By way of example, the current market rate for an ounce of silver is US$15 per ounce, and in the case of gold, it’s over US$1,700 per ounce. Once a streamer has those metals, it can choose to sell them on to the open market at those current rates.
In short, the streaming model followed by Wheaton carries less risk when compared to traditional miners. In terms of potential, this can be just as (if not more) lucrative than its traditional peers.
How does Wheaton differ?
As a streamer, Wheaton benefits from the points I mentioned above. Additionally, in providing that upfront financing to traditional miners, Wheaton can quickly move on to the next investment opportunity. This one factor is instrumental in Wheaton boasting a portfolio of 20 active mines on three continents and nine more in development.
That flexibility also extends to the types of metal that are produced by the mine. Unlike some traditional miners that focus on one to two precious metals, Wheaton has adapted in recent years to include streams for a variety of different metals. Examples of this include cobalt and palladium.
In the most recent quarter, Wheaton saw palladium production surge 8.4% over the same period last year. Over the course of the full fiscal quarter, that production surge comes out to an incredible 49.8%. In that same quarter, Wheaton saw similar gains for gold (5.9% gain year over year) and silver (8.4% over the prior quarter).
Overall, on an adjusted basis, Wheaton earned $77.9 million, or $0.17 per share, in the most recent quarter, making it a safe investment option.
Wheaton is a safe investment, but should you buy?
In times of uncertainty, investors have historically moved to “safer” investments. That extends to precious metals and, by extension, streamers like Wheaton. To be clear, I’m not saying that Wheaton is completely immune to the market volatility we’re seeing now. In my opinion, Wheaton should be considered as a safe investment for any well-balanced portfolio.
Here’s How Much $10,000 Invested in Aurora, Canopy and Aphria Is Worth Today – Yahoo News Canada
It’s no secret that the cannabis sector has been incredibly hard hit as of late. The industry was already struggling before the market crash, but the crash only made things worse. Since legalization, cannabis stocks across the board have fallen from peak prices. Yet there are some that have fared better than others, and in some cases, investors are still making a killing if they got in early.
So let’s take a look at how the biggest producers of cannabis have been doing lately, and what an investment of $10,000 would look like today.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Canopy Growth Corp. (TSX:WEED)(NYSE:CGC) has been dubbed the largest producer of cannabis in the world, and it likely still is. However, that didn’t stop the company from plummeting after legalization.” data-reactid=”26″>Canopy Growth Corp. (TSX:WEED)(NYSE:CGC) has been dubbed the largest producer of cannabis in the world, and it likely still is. However, that didn’t stop the company from plummeting after legalization.
The company made tons of acquisitions, huge investments into research and development, and expanded into the United States where it continues to produce cannabidiol (CBD) and hemp products. It also make significant partnerships that should have put the company on top.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="And it has been on top, albeit in a slumping industry. What its partner and investors wanted to see was profit, and that’s still a ways off for Canopy. While 2022 seemed to be the consensus, the company recently stated it would not be profitable by that year.” data-reactid=”28″>And it has been on top, albeit in a slumping industry. What its partner and investors wanted to see was profit, and that’s still a ways off for Canopy. While 2022 seemed to be the consensus, the company recently stated it would not be profitable by that year.
While Canopy grew an incredible 9,100% from its initial public offering (IPO) to peak prices, shares are now down 56% from that price. Still, a $10,000 investment would be worth $399,990 at today’s share price.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Next up, we have Aphria Inc. (TSX:APHA)(NYSE:APHA) a cannabis stock that had a lot to prove in the last two years. The company is the third-largest producer, but things took a turn when Aphria was accused of undervaluing its Latin America acquisitions — accusations that have caused shares to plummet.” data-reactid=”31″>Next up, we have Aphria Inc. (TSX:APHA)(NYSE:APHA) a cannabis stock that had a lot to prove in the last two years. The company is the third-largest producer, but things took a turn when Aphria was accused of undervaluing its Latin America acquisitions — accusations that have caused shares to plummet.
However, with the investigation coming up with nothing, and Aphria actually producing a profit, things have certainly changed. Though not selling at peak prices, given the economic climate, Aphria looks to be on a promising path in the future.
The stock grew 1,360% before falling in share price — and that was a few years back. Today, if you were to have bought during its IPO an investment of $10,000 would be worth $38,935.28 as of writing.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Aurora Cannabis Inc. (TSX:ACB)(NYSE:ACB) might be considered the black sheep of the cannabis industry at the moment. There was a lot of promise with the cannabis producer, as the company had two things going for it.” data-reactid=”35″>Aurora Cannabis Inc. (TSX:ACB)(NYSE:ACB) might be considered the black sheep of the cannabis industry at the moment. There was a lot of promise with the cannabis producer, as the company had two things going for it.
It looked like it could take the top spot of the largest producer in the world, and for the cheapest cost. Aurora can boast a cost per gram price of under $1.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="However, the lack of partnership left the company diluting shares. Recently, the company had to consolidate its share or risk being taken off of the New York Stock Exchange. But things are starting to look up, as the company is now expanding into the United States. With 25 other countries under its belt, this makes it the most international cannabis producer.” data-reactid=”37″>However, the lack of partnership left the company diluting shares. Recently, the company had to consolidate its share or risk being taken off of the New York Stock Exchange. But things are starting to look up, as the company is now expanding into the United States. With 25 other countries under its belt, this makes it the most international cannabis producer.
Unfortunately, an investment of $10,000 in Aurora would actually be worth $8,510 today, so hopefully things look up for this cannabis producer.
The post Here’s How Much $10,000 Invested in Aurora, Canopy and Aphria Is Worth Today appeared first on The Motley Fool Canada.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="More reading” data-reactid=”40″>More reading
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Fool contributor Amy Legate-Wolfe owns shares of Aurora Cannabis and Canopy Growth.” data-reactid=”48″>Fool contributor Amy Legate-Wolfe owns shares of Aurora Cannabis and Canopy Growth.
<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2020” data-reactid=”49″>The Motley Fool’s purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool Canada’s free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. Motley Fool Canada 2020
This Top TSX Gold Stock Is a Great Long-Term Investment – The Motley Fool Canada
There is no question this economic environment is ideal for gold prices and, therefore, TSX gold stocks. However, some gold stocks are so strong, investors can buy the stocks knowing they are great long-term investments.
Gold is something investors should always have at least a small portion of their portfolio exposed to. And in times of uncertainty, when a safe-haven asset is demanded, that’s when investors should be increasing their exposure to gold.
Today’s environment is precisely that. The uncertainty in both financial markets and economies makes a safe-haven asset like gold one of the most attractive assets to be increasing exposure to.
TSX gold stocks today
The economic environment around the world has been dire since the coronavirus pandemic hit. With no vaccine and little knowledge of the deadly disease, governments had to act quickly to protect their countries, enacting measures that have decimated economies.
Then, to deal with the economic consequences, massive fiscal and monetary stimulus has taken place around the world.
While this stimulus was needed and warranted, it doesn’t take away from the fact that central banks are printing money and governments are issuing new debt at unprecedented levels.
All of these conditions are creating the perfect storm for gold prices to rise. Some analysts even think that gold could skyrocket to $3,000.
Gold prices have been gaining momentum going back to December of 2018. In those 17 months since, prices have increased roughly 40%, an extremely rapid pace for gold.
And when you consider that the environment today is even more favourable than it was in 2018 and 2019, increasing exposure to gold investments is a no-brainer.
Top TSX gold stock to buy
Any time the price of gold is rising significantly, gold stocks will see a major positive effect. Since December 2018, the iShares S&P/TSX Global Gold Index ETF is up roughly 100% and more than double the pace of gold.
Barrick, a $60 billion company, is one of the world’s largest gold producers and an investor favourite in the gold industry.
The company is one of the best in the business, and, with its massive global diversification, it’s a stock you can hold for the long term.
In the first quarter, Barrick produced incredible results. The average realized gold price was $1,589 — a 22% increase from the same quarter in 2019.
That increase in gold price drove a 30% increase in revenue and a roughly 50% increase in operating and net income.
And when you consider that the average realized price in the quarter is nearly 10% below where gold is today, it’s clear this company is going to have a strong period of performance over the near term.
One of the reasons Barrick is so attractive today is the focus management has had on cutting costs and increasing shareholder value.
In the first quarter, the company produced nearly 1.25 million ounces and had all in sales costs of just $950 an ounce.
So, it’s no wonder why Barrick, the top TSX gold stock, is so profitable in the current environment and will continue to increase its profitability as gold prices rise.
Barrick’s solid operations and high-quality management team makes it one of the top gold stocks on the TSX.
It even pays a dividend that yields more than 1%. While this isn’t going to make or break your investment, it demonstrates management’s willingness to return capital to shareholders.
If you are underweight gold or need some resiliency in your portfolio, I would seriously consider adding a position in Barrick Gold today.
As we approach a new month, check out some of the other top stocks to buy besides Barrick.
Renowned Canadian investor Iain Butler just named 10 stocks for Canadians to buy TODAY. So if you’re tired of reading about other people getting rich in the stock market, this might be a good day for you.
Because Motley Fool Canada is offering a full 65% off the list price of their top stock-picking service, plus a complete membership fee back guarantee on what you pay for the service. Simply click here to discover how you can take advantage of this.
Fool contributor Daniel Da Costa has no position in any of the stocks mentioned.
A case study in how not to invest in bank stocks – The Globe and Mail
I have two investments I just don’t understand: BK and BK.PR.A. They were purchased by a financial adviser I have since parted ways with. I know they invest in bank stocks, but I can’t understand why BK in particular is doing so badly. I feel that these shares are a special type of investment that is more complicated than most.
More complicated than most? That’s an understatement. Your adviser shouldn’t have recommended a product you don’t understand. What’s more, as you’ll see, the adviser’s recommendation to buy BK and BK.PR.A together makes no sense from a financial standpoint – except for the fat commission he or she likely pocketed in the process.
BK and BK.PR.A are two different classes of shares issued by Canadian Banc Corp., an investment vehicle known as a “split share” corporation. Canadian Banc Corp. holds a portfolio of the six biggest Canadian bank stocks, and while BK and BK.PR.A both provide exposure to those underlying stocks, they do so in different ways and with dramatically different results.
BK.PR.A, the preferred shares, are relatively stable. They don’t participate in the ups and downs of the underlying banks, but they pay a fairly secure dividend that is funded by the dividends from those shares. The preferreds also get first claim on the capital of the underlying portfolio up to the preferred’s issue price of $10 a share.
Adding yet another layer of protection, although BK.PR.A’s dividend is variable because it is tied to the prime lending rate, BK.PR.A’s yield is never allowed to drop below 5 per cent, as calculated on the $10 issue price. (BK.PR.A has been trading slightly higher than $10 recently, so the yield based on the market price is currently a bit below 5 per cent.) Reflecting its conservative characteristics, BK.PR.A has produced steady returns over the years, and is a suitable choice for an income-seeking investor.
BK, the class A shares, are a different story. Essentially, the class A shares (also known as capital shares) are entitled to all of the value in Canadian Banc Corp.’s bank stock portfolio after the preferreds’ dividend and fixed capital requirements are satisfied. This means the class A shares are effectively a leveraged bet on the underlying stocks. If bank stocks rise, the class A shares will rise even more. If bank stocks fall, the class A shares will suffer an even bigger loss.
The sell-off triggered by the novel coronavirus pandemic is a great illustration. From Feb. 21 through May 28, BK shares plunged about 37 per cent. That’s far worse than the drop of about 22 per cent for the BMO Equal Weight Banks Index ETF (ZEB), a fund that holds the same six banks – but with no leverage, and lower costs.
BK also pays a dividend, but it’s anything but stable. The dividend is reset monthly to yield 10 per cent based on BK’s average market price over a designated three-day period, which means the dollar amount of the dividend will rise in good times, and fall in bad times.
When markets get really ugly, however, BK’s dividend can disappear altogether. Even though none of the underlying banks has cut its dividend, BK suspended its payout in March after the net asset value per unit of Canadian Banc Corp. fell below the threshold of $15 that triggers a cessation of dividends on the class A shares. BK has since reinstated its dividend, but the monthly amount is about 40 per cent lower than it was a year ago.
You may be wondering how BK can pay a 10-per-cent dividend when the preferred shares are already yielding 5 per cent. According to the prospectus, “to supplement the dividends received on the portfolio and to reduce risk, the company will from time to time write covered call options in respect of some or all of the common shares in the portfolio.”
But many split share corporations also resort to selling stocks in the underlying portfolio to generate cash required to pay dividends on their class A shares, said James Hymas, president of Hymas Investment Management. “It is my belief that, if people understood class A split shares, they wouldn’t buy them.”
With the rebound in bank stocks this week, BK has recovered some of its hefty losses. But its total return, including dividends, for the five years through May 27 was still negative 1.2 per cent on annualized basis, according to Bloomberg. Over the same period, ZEB posted a positive annualized total return of 4.6 per cent. Clearly, an investor who wanted exposure to bank stocks would have been better off buying a low-cost bank ETF instead of a leveraged product such as BK.
What’s more, your adviser should have known that, although BK and BK.PR.A have different characteristics on their own, they are complementary pieces of the same underlying portfolio. When you put them together you’re essentially buying a portfolio of bank stocks – just in two different wrappers that add unnecessary layers of complexity and fees. Canadian Banc Corp.’s management expense ratio of 1.35 per cent is more than double ZEB’s MER of 0.62 per cent.
“Your reader was given really stupid advice by the adviser, because when you own the class A shares and preferred shares in equal proportions, all you own is a fund with a lot of bells and whistles that owns bank stocks,” Mr. Hymas said. “You can do that a whole lot easier by buying an ETF that owns bank stocks. And it’s much cheaper.”
E-mail your questions to email@example.com. I’m not able to respond personally to e-mails but I choose certain questions to answer in my column.
Special to The Globe and Mail
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