WS: Why Silver Might just be the Metal to Invest in
Tiffany & Co. (NYSE:TIF) and Silver Wheaton (NYSE:SLW) are two reasons why silver gets importance in the market compared to the attention that gold is full of. The former’s signature products are all made of silver. It has been able to charge premium prices for this metal for years now whereas the latter focuses more on streaming; repaying miners through gold and silver production. Both companies are good buys when it comes to investing in the silver market. However, each one of them has their differences when it comes to operations.
The average cost of silver in Silver Wheaton (NYSE:SLW) is around $4 per ounce whereas that of gold is $400 per ounce. Silver accounts for nearly 60% of the revenues of the company. It was profitable for the past decade now and a reason for this success is the business model of the company which gives it huge margins. Last year, the operating margin of the company was nearly 44% however; it has been down from the 77% back in 2011. Even with a 60% or more reduction in silver prices, the business model of the company gives it a lot of room for profits.
On the other hand, Tiffany & Co. (NYSE:TIF) focuses more on retailing and after the economic recession, the revenues of the company have been higher each year. The earnings of the company were more volatile with its expansion. This company gives us a different perspective when it comes to silver. The 150 year old firm has proven to be able to tackle any problem you throw at it.
Thus, investors who wish to invest in silver might want to take a close look at Tiffany & Co. (NYSE:TIF) given the dealings it makes with the metal.
Therefore, two things that should be focused on when it comes to analyzing the business for its performance in the market are its sales and profit margins compared to the overall retail environment. Same store sales are also important as they give insight into how the company’s current store base has performed with the revenues through openings of new stores.
The new stores are also the reason for long term growth of the company. Therefore, an investor would want to ensure that the management of the company focuses on its expansion plans. These factors are important to retailers such as Tiffany & Co. (NYSE:TIF) but might not be for miners at all.
Mining companies might bring in a hefty amount of profits but why bother investing in them when you can add a company to your portfolio which makes money through metals without actually doing all the hard work like Silver Wheaton (NYSE:SLW). If you really want to move down the anti-mine route then you can always consider Tiffany & Co. (NYSE:TIF) that has turned a not-so-pricey-compared-to-gold metal into a premium item. Through investing in either one of these companies, investors can get the idea that investing in silver might just be as exciting as investing in gold
