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Top Trades for Thu, 30 Aug 2018 14:23 – WPM

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Top Trades for Thu, 30 Aug 2018 14:23 – WPM
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Speaking of /SI, WPM is in the toilet thanks to /SI prices.  The last 3 Qs they beat earnings by 18.8%. 6.7% and 14.3% and they should have no trouble hitting 0.60 for the year on a $17.49 stock (p/e 29) in an off year.  

Year End 31st Dec 2012 2013 2014 2015 2016 2017 TTM 2018E 2019E CAGR / Avg
Revenue $m 849.6 706.5 620.2 648.7 891.6 843.2 857.2 823.4 920.5 -0.1%
Operating Profit $m 600 387.7 202.9 -157.3 223 74.7 328.9     -34.1%
Net Profit $m 586 375.5 199.8 -162 195.1 57.7 315.1 271 318.7 -37.1%
EPS Reported $ 1.65 1.05 0.56 -0.41 0.45 0.13 0.71     -39.8%
EPS Normalised $ 1.65 1.05 0.68 0.22 0.56 0.46 0.69 0.58 0.69 -22.3%
EPS Growth % +6.5 -36.0 -35.6 -67.2 +151.4 -17.0 +13.2 +25.6 +18.2  
PE Ratio x           38.1 25.8 30.3 25.7  
PEG x           1.49 1.01 1.67 6.63
Profitability

They won't recover unless /SI does but it's a slightly safer way to play silver than just risking the Futures.  In the OOP, we have the 2020 $15 calls half-covered with the $25 calls and we sold the $20 puts for $3.30 so net $16.70 and we're getting close, but this is below where we came in in Feb – so another chance to play. 

As a new play on WPM, I like:

  • Sell 10 WPM 2020 $20 puts for $3.70 ($3,700)
  • Buy 20 WPM 2020 $15 calls for $3.85 ($7,700) 
  • Sell 20 WPM 2020 $20 calls for $1.55 ($3,100) 

That's net $900 on the $10,000 spread that's $5,000 in the money at $17.50 and your worst case is owning WPM at net $20.90 but the upside is a nice 10-bagger at $9,100 and it's not like we're asking for much.

In the OOP:

  • Let's buy back the 10 short 2020 $25 calls for 0.62 ($620)
  • Let's add 10 more 2020 $15 calls at $3.85 

In the LTP:

  • Let's buy back the 10 short 2020 $25 calls for 0.62 ($620)
  • Let's roll down the 20 2020 $17.50 calls  at $2.40 to 40 of the 2020 $15 calls at $3.85