Tag Archives: SLW

Canadian Stocks Long Ideas – December 2013

The US Dollar has been rising and rising against the Canadian. So, I’ve been looking to buy some Canadian stocks instead, although the following 2 stocks are also available for purchase on the NYSE.

Silver Wheaton

TSE:SLW $21.37 | Yield: 1.78% | Morningstar fair value estimate: $33

Silver Wheaton (SLW) signs long-term purchase agreements with mining companies. So, it is able to buy silver at the fixed cost outlined in the agreements, without having to worry about the cost and risk of running mines. Its earnings per share has still continued to increase even though the price of silver (SLV) has fallen 35% year-to-date. That’s because it has signed more agreements. Its revenue mainly comes from the sale of silver, although they sell some gold as well. Both precious metals are at their 3-year low. Analysts estimate the next 5-years of earnings growth is 20% for SLW. The demand for silver mostly comes from industrial usage, jewelry creation, and coin creation, totally accounting for 72% of demand. Other areas of demand include government purchases, producer de-hedging, and investment. If you believe the demand of silver will increase, and thus, believe its price will increase, now maybe a good time to start a position as it is bouncing off its 400-day moving average. Morningstar has a fair value estimate of $33. That is a margin of safety of 54%. Silver Wheaton serves as a capital gains play in my portfolio. I buy small positions at a time, and may sell slots of positions at resistance levels.


TSE:ENB $43.26 | Yield: 3.24% | Morningstar fair value estimate: $54

Enbridge (ENB) transports and distributes energy across Canada and the United States. It operates a crude oil and liquids transportation system. It just increased its payout by 11% (from $0.315 to $0.35 per quarter) which is inline with its recent year increases between 10 and 15%. Morningstar has a fair value estimate of $54. That’s a margin of safety of 24.8%. I believe there will be higher demand for energy in the future, and thus, I plan on holding Enbridge for the long-term for dividend and capital growth. I believe it’s a good buy around the $45 area.

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