Wheaton Precious Metals broke out past a buy point Monday as gold stocks rallied. Wheaton is the IBD Stock Of The Day.
Gold prices jumped 2.6% to $3,402 an ounce near midday trading in New York after a weekend that sparked a run for haven assets.
China and the U.S. accused each other of breaking an agreement struck last month that had given hope of ending the trade war. U.S. officials say China is "slow-rolling" its compliance with the pact, in particular the resumption of rare-earth mineral exports. Chinese officials said the U.S. is using "discriminatory restrictive measures" that threaten to break the tariff agreement.
Meanwhile, Ukraine strikes on Russian airfields, destroying many strategic bombers, also raised fears.
Shares of Wheaton Precious Metals jumped more than 4% to 90.81, gapping above the 87.42 buy point of a flat base. Volume was running well above average. Although the relative strength line is not quite at new highs, the stock has a solid Relative Strength Rating of 95.
More important, the gold stock has a perfect Composite Rating of 99, according to IBD Stock Checkup.
Besides a 61% advance year to date, the stock's leadership is grounded in outstanding profit growth. Wheaton's earnings increased 6%, 26%, 22% and 53% in the past four quarters, according to IBD MarketSurge. Sales rose 13%, 38%, 21% and 58%.
Analysts expect the growth trend to continue with current-quarter EPS of 52 cents, up 57% year over year, and sales of $426.1 million, an increase of 43%.
Gold Stock Does Not Own Mines
Canada-based Wheaton does not own any mining operations. Rather, it is a "streaming" business that offers financing to mining companies for the right to buy gold and other precious metals at reduced prices after they are produced. Wheaton works with 18 operating mines and 28 development projects.
Nearly 60% of its forecast 2025 portfolio is in gold production, with 39% in silver, plus smaller palladium and cobalt holdings.
In an investor presentation, Wheaton says 83% of its current production assets come from high-margin mines operating in the lowest half of their respective cost curves.
The mining group is today's third-best performer out of 197. SPDR Gold Shares, an ETF that tracks gold prices, jumped 2.4% and is 2% from new highs. VanEck Gold Miners ETF rose above the 53.25 buy point of a cup without handle and past resistance around 51.
Other Gold Plays Break Out
Several other gold stocks broke out of bases in heavy trading, too, in what should be considered a confirmation of leadership.
Triple Flag Precious Metals climbed above the 22.21 buy point of a shorter-than-usual double-bottom base.
AngloGold Shanti broke out past a 45.30 entry and another buy point at 46.90. Eldorado Gold cleared another short double bottom with a 20.44 buy point.
Royal Gold is rising past a 184.77 double-bottom-esque buy point and cleared a trendline entry around 180 Monday. DrdGold also broke above a trendline, this one with an entry around 15.25.
Wheaton stock has a 21-day average true range (ATR) of 3%. The average true range is a metric available on IBD's MarketSurge that gauges the characteristic breadth of a stock's behavior. Stocks with a high ATR tend to make large price moves that can trigger sell rules. Stocks with lower ATRs tend to make more incremental moves.
With the S&P 500 and Nasdaq now in a power trend, investors can buy stocks with ATRs up to 8%, though they should be wary of being too concentrated in high-octane names.
Triple Flag has an ATR of 2.74%, DRDgold 4.12%, Royal Gold 2.66%, AngloGold 4.07% and Eldorado 3.57%.
