[Daily Trade Alert note: This is one of our 9 Best Stocks to Own Right Now.]

Silver Wheaton (SLW) has one of the best business models I have ever seen…

It could make a billion dollars in profits in 2013… yet it has less than two-dozen employees and basically no operations.

Its “business” is driving to the bank and cashing royalty checks. When your business is depositing big checks payable to you, it’s near impossible to lose money. The biggest expense for a royalty company is income taxes… but Silver Wheaton has found a way to pay no income tax. It’s based in the Cayman Islands.

Silver Wheaton cashes royalty checks on silver – gold’s redheaded stepchild. And if silver simply stays where it is, Silver Wheaton shares should nearly double by 2013.

Here’s how it works…

[ad#Google Adsense]Silver Wheaton approaches gold mining companies about buying their “pesky” silver byproduct. You see, gold companies want to be primarily gold producers, not gold-and-silver producers. But because silver deposits often occur alongside gold deposits, silver is often a byproduct of gold mining.

Silver Wheaton approaches mining companies with cash in hand when the miners are the most vulnerable… when it’s time to build a mine. A new mine is incredibly expensive, and “free” cash from Silver Wheaton up-front to help build a mine is irresistible… It’s too attractive NOT to take.

Then the good stuff starts for Silver Wheaton… It gets all the silver that comes out of the mine for just $4 per ounce.

With silver at $29 right now, Silver Wheaton nets $25 per ounce of silver.

Silver Wheaton’s pile of silver keeps growing. It’s on track to sell 40 million ounces of silver in 2013. If the company nets $25 per ounce… times 40 million ounces… it’ll make a profit of $1 billion dollars in 2013.

Economist-turned-Gold Stock Analyst-editor John Doody says a fair value for precious metal royalty “streaming” companies like Silver Wheaton is 20 times the royalties.

Twenty times $1 billion is $20 billion. Yet as I write, Silver Wheaton is valued around $10.8 billion. Silver Wheaton shares would have to nearly double to get that kind of market value.

What’s our downside here? Primarily the price of silver…

If silver tanks, Silver Wheaton will tank even harder. Since Silver Wheaton is so highly leveraged to the price of silver, it can fall dramatically – and it has in the past.

If the price of silver goes up (which it should in the long run) or the ounces it earns royalties on go up (which they should in the long run), Silver Wheaton will double or more from here.

[ad#ChinaBlankCheck]Months ago in my True Wealth newsletter, I recommended buying shares of Silver Wheaton. I told my readers to use a 50% trailing stop and sell half once they were up 100%. From there, the sky is the limit.

Currently in True Wealth, Silver Wheaton is a “hold.” I moved these shares to a hold in mid-December. Corrections in silver are often violent. So I will wait for this correction to pass – I will wait for the uptrend to resume – before buying back in again.

But Silver Wheaton is a story you should follow… It’s a double in waiting.

Good investing,

— Steve Sjuggerud

[ad#jack p.s.]

Source:  Daily Wealth