Wheaton Precious Metals (WPM): 2019 Top Picks' Mid-Year Update

07/19/2019 5:00 am EST


Frank Holmes

CEO and CIO, U.S. Global Investors, Inc.

Frank Holmes, money manager, CEO of US Global and editor of Frank Talk, selected Wheaton Precious Metals (WPM) as his top investment idea for 2019. The stock has since risen 24%. Here's his latest update on this gold royalty streaming company.

Back in January, I chose Wheaton Precious Metals as my number one stock pick for 2019. So far, so good: The company reported record gold sales in the first quarter, and in the first six months through the end of June, shares were up an impressive 24 percent.

The story now is the same as it was then. As one of the world’s largest and most successful royalty and streaming companies, with the highest revenue per employee, Wheaton is well-positioned to take advantage of explorers and producers’ growing appetite for capital.

Originally focusing on silver streams, the Vancouver-based company has expanded into gold and, in the past 12 months, palladium.

This decision to diversify was a profitable one. As I said, Wheaton reported record gold sales in the first quarter. Sales volumes exceeded 115,000 ounces, a whopping 64 percent increase over the same period a year earlier.

And thanks in large part to its 2018 acquisition of a stream from Sibanye Gold, which operates the Stillwater mine in Montana, Wheaton’s palladium sales were more than 5,100 ounces, surpassing silver sales.

I expect palladium, in fact, to be Wheaton’s fastest growing revenue segment going forward. 2019 is the first full year of production from the Stillwater stream, so we should see revenue from palladium climb significantly from the $9.24 million that was generated in 2018.

Global demand for the metal remains very robust, driven primarily by automakers, which use palladium in the fabrication of catalytic converters.

Ever the leader in precious metal streaming, Wheaton is now bracing for the future with blockchain technology. According to reports, the company will use blockchain to streamline its metal accounting processes, helping it to accurately track and certify metals along the value chain, from source to consumer.

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