This Mining Stock Could Strike Gold

WPM options are attractively priced at the moment

Managing Editor
May 15, 2020 at 3:10 PM
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One name that has brushed off the broad market sell-off this week is Wheaton Precious Metals Corp (NYSE:WPM), sporting a 5% weekly gain even despite a downgrade to "sector perform" from "outperform" from RBC.  Although one analyst has moved to the sidelines, data from Schaeffer's Senior Quantitative Analyst Rocky White suggests WPM is flashing a buy signal that indicates more tailwinds ahead for the red-hot gold stock.

Daily Stock Chart WPM

Wheaton Precious Metal stock earlier hit a nine-year high of $45.44. This new peak comes amid historically low implied volatility (IV) -- a combination that has been bullish for the stock in the past. According to White's modeling, there was one other instance in the past five years when the stock was trading within 2% of its 52-week high, while its Schaeffer's Volatility Index (SVI) sat in the 30th annual percentile or lower -- as is the case with WPM's current SVI of 47%, which sits in the 29th percentile of its 12-month range.

The data shows that one month after that signal, the mining stock was up 26.6%. From its current perch at $45.32, another move of that magnitude would put the stock roaring past its April 2011 record high of $47.60. During the stock's meteoric 12-month rise of 128%, WPM's 10-day moving average has emerged as an ascending floor -- one that's only been breached once on a closing basis since March.

 

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