Cameco Corporation (CCO.TO)

Doesn’t know what the catalysts are going to be to move it up, other than it just getting so cheap that it would reach the point of capitulation and so cheap that people would start to buy it. They still have the CRA overhang, which should probably be resolved later this year.

The real game changer in his view was when the OPEC cartel opted to take about 2 million barrels a day of global oil supply off the market to support prices. The Kazakhstan state owned mining company who controlled 30% of the global uranium supply, curtailed production by 10% in early January, and that immediately tightened the uranium market. The stock actually responded prior to that, so there might be some element of a Trump bump in there. Uranium prices have strengthened from $18 a pound to $23, and long-term prices are much higher. Dividend yield of 2.7%. (Analysts’ price target is $16.)

China has a lot of plants potentially coming on line. Uranium prices took a big beating and have come back somewhat. There is a good chance they go up in the future. He does not like CCO-T enough yet to buy it. If you want to invest in this field, this is one to invest in.

The trend line was down for a couple of years. Then it broke out. It is consolidating after the breakout. It needs some positive news.

They are selling to nuclear reactors, which take a long time to build and a long time to get going. The news out of Japan is certainly not constructive. He is not very positive on this. Feels natural gas is more cost effective, and is available in abundance.

Uranium is always difficult. Every uranium company has had a difficult time earning an acceptable ROC. This has a 4% ROC, and he would have trouble justifying the price.

The period of seasonal strength is October all the way through to January. The best months of the year are November and December. It bottomed in the month of November, ran up to January and has consolidated since. Now it is flagging. The chart is showing a consolidation pattern, nothing bullish or bearish, but it would suggest that break would be in the direction of the trend, which is higher. Wait for this to break.

The world’s largest publicly traded uranium producer. The stock has been in a slump since the Fukushima disaster in 2011. Things started to change in advance of changes of the uranium market fundamentals last summer. Kazatomprom, Kazakhstan’s state owned mine, which owns 30% of the uranium market, decided to cut production by 10%, which will meaningfully tighten things. The price has responded. Cameco has a dispute with Canada Revenue on back taxes and transfer pricing, which is not going to go away in the next 12-18 months. They also have a dispute with the Tokyo Electric Power Company.

2.9% dividend. Supply vs. demand, which dried up due to the Japanese nuclear accident. He wants to avoid it. It is not a commodity he wants to do.

On uranium demand, the market is probably not going to come into balance until 2024 or so. It is hard to see how this company can do well when there is not going to be much of a lift in uranium. Expects it to be range bound for the foreseeable future in the $10-$15 range. It’s best of breed and he likes the name, but it is very hard without a resurgent in the uranium price. Doesn’t know why you would want to be a buyer of this.

This has a couple of problems. There is a big tax liability outstanding, which is a substantial issue. The pricing of uranium is problematic. This is world-class in terms of its resource, but he just doesn’t think there is any pricing power. Thinks it is dead money.

He was short until November when it started to turn the corner. It has taken off since then. The valuation is a bit of a challenge for him. The commodity is changing very quickly. Uranium has come off its bottom. On a price/momentum basis you could own it, but there has been a big move without knowing that cash flows will show up in the share price. Wait until earnings materialize.

There has recently been a rally in uranium stocks. The general impression is that uranium prices have probably troughed at the $20 spot level. There is no near term catalyst to get the prices going up. It is unprofitable at this level for mines to be producing, and mines have been shutting down. Nuclear reactors have been very slow to start up with very weak demand for uranium.

Owned this in the past, but sold it last fall. If bullish on uranium, this is one of the very, very few ways to play the trade. Physical uranium, unlike most other commodities, is restricted because it is dangerous and has uses in weapons production. This is the most liquid way to play an improving uranium market. It looks like the supply/demand balance is shifting heavily and moving closer to balance, and this company should benefit from that.

Owned this years ago, and has no intention of buying again. The stock has done better with uranium and energy prices in general going up, but uranium is uranium. You read in the papers about 60 nuclear plants being built, but that was 6 years ago, and they are still having trouble bringing them on. He would avoid this.